Topic 1, Lesson 9: US Economic Growth (1865-1890)

Topic 1, Lesson 9: US Economic Growth (1865-1890)

Impact of the Civil War

• Is war good or bad for the economy? Why?

• What type of goods were in demand during the Civil War?

• What goods had to be mass produced during the Civil War? Who was in need of these goods?

War is good for the economy because goods have to be mass produced and new technological advancements are made.

During the Civil War, there was an increase in demand for manufactured goods such as clothes, food, guns and transport, all of which were needed by the soldiers fighting. Additionally, methods of mass production and transportation of goods had to be developed.

Topic 1, Lesson 9: US Economic Growth (1865-1890)

Availability of Land

• Which President was determined to focus on the Westward Expansion of America?

• How did Westward Expansion lead to the development of the agricultural/farming industry?

President Ulysses Grant was determined to focus on the Westward expansion of America.

Westward expansion led to an increase in Westward settlement meaning there was an increased need for the mass production of crops such as wheat, which, in-turn, meant farming had to be expanded to ensure there was plenty of food for the growing population. A demand for food in both the industrial cities and new-found, Western land, encouraged greater mechanisation (farming machinery).

Topic 1, Lesson 9: US Economic Growth (1865-1890)

Population Growth

• In which two 19th century decades did the United States see a rapid growth in its’ population?

• What was the population of the United States in 1860?

• What was the population of the United States in 1880?

• During the 1870s, how many immigrants moved to the United States? Where did these immigrants come from? What goods did these immigrants stimulate further demand for?

• How did an increase in population lead to economic growth and increased incomes?

Between 1860s and 1870s the United States saw a major increase in its’ population. In 1860, the population of the US stood at 31.5 million. By 1880, this had increased to 50 million. One reason for this major increase in population was the increased number of immigrants that moved to the US from Europe. For example, during the 1870s, 2.8 million immigrants came to the United States searching for the ‘Land of Opportunity’. Upon their arrival, immigrants increased demand within the United States for coal, clothes and food.

Population growth within the US contributed toward the country’s economic expansion as immigrants and children were classed as ‘cheap labour’. This meant they would work the same (if not more) hours than typical Americans for less money. Children would often work within the industrial industries, which meant that family’s within the United States had greater incomes, which led to better housing, food, public health and medical knowledge.

Topic 1, Lesson 9: US Economic Growth (1865-1890)

Railroad Transport Expansion

• Why were railroads a better way of transporting than the previously used, horse and carriage?

• What is the transcontinental railroad? When was the first transcontinental railroad opened? How long did it previously take to travel from New York to San Francisco? How long would it now take?

• Between 1868 and 1873, how many kilometres of new track was laid across the United States?

• How did railroad expansion lead to increased employment in multiple industries?

Railroads were a major development within the 19th century due to their fast and efficient way of transportation.

The first transcontinental railroad (or transatlantic railroad) was opened in 1869. This railroad would transport people and goods from the Atlantic Ocean (on the East coast of America) to the Pacific Ocean (on the West coast of America). Prior to the opening of the transcontinental railroad, travel from the East to the West would take 6 months. However, this time was significantly decreased during the 19th century as the railroad allowed this journey to take just 6 days.

Between 1868 and 1873, fifty-thousand km of new track was laid across the country.

The railroad expansion also led to increased employment rates within other industries such as the coal (needed to fuel the trains), steel (needed within the manufacture of trains) and engine making companies (known as locomotives).

Topic 1, Lesson 9: US Economic Growth (1865-1890)

Availability of Capital

• What does ‘capital’ refer to?

• How did the banking system change after the Civil War? Why did it have to change?

• What were tariffs? Why was the US government happy to introduce tariffs?

• What is the New York Stock Exchange?

• What does the term ‘annual turnover’ mean?

• What was the annual turnover for the New York Stock Market in 1865?

• What position in the world was America’s stock exchange by 1890?

Capital refers to money.

After the Civil War, the United State’s banking system had to evolve to cope with the increased amount of money circulating the country. This was partially due to the change that the Americans had made to ‘notes’ instead of carrying around metallic money.

Tariffs are a form of tax that are placed on goods that are being imported from abroad. Tariffs were introduced by the US Government after the Civil War to ensure that American-made goods were cheaper in price than goods being imported from abroad. This meant that people were more likely to buy American goods than they were foreign goods.

The New York Stock exchange is the central location for America’s stock exchange. This is the system where people buy and sell their shares in the countries’ companies.

Annual turnover refers to the total income a business makes over one financial year.

Annual turnover for the New York Stock Market:

1865→ Over $6 billion

1890→ New York Stock Exchange had become the second largest money market in the world.

Topic 1, Lesson 9: US Economic Growth (1865-1890)

The Role of Government

• What approach did the US government take toward the US economy during the late 1800s?

• What did this mean for the freedom of businessmen during this time?

• What one type tax was the government happy to place on imported goods in the US?

• Did trade unions exist in America during this time? How would the small breakouts of trade unions be dealt with by the government?

The US government took a laissez-faire approach to its’ economy during the late 1800s. This meant the interference within the country’s economy was minimal from the government.

Minimal interference from the government within the US’ economy meant that business men were free to run their enterprises in the way that they wished.

Congress was happy to place tariffs on imported goods into America. Sometimes, these tariffs would ensure American goods were costing more than 50% less than equal imported goods.

During the period after the Civil War (1865-1890), trade unions were uncommon and those that did exist were weak and divided. Small breakouts of workers demanding for better pay and shorter working hours would be dealt with by federal authorities and troops.

Topic 1, Lesson 9: US Economic Growth (1865-1890)

Corporations and Trusts

• What are corporations?

• What are trusts?

• Who were the ‘Robber Barons’? What industries did these people work in?

• Who was the first American billionaire?

• What trust was created by Rockefeller?

Corporations are companies.

Trusts are a way to manage assets (money, land or buildings) for people.

The Robber Barons were a group of 4 wealthy American men who were accused of being monopolists, who earned profits by intentionally restricting the production of goods and then raising prices. These men were:

• Cornelius Vanderbilt → Railway industry

• Andrew Carnegie → Steel industry

• John D Rockefeller → Oil industry

• J.P Morgan → Financial industry

Rockefeller was the creator of the standard Oil Company (which was a trust) and dominated the oil industry in the USA. He also became the first US billionaire.

Topic 1, Lesson 9: US Economic Growth (1865-1890)

Technological Innovations

• Which of the Robber Barons dominated the steel industry?

• How did Carnegie manage his business?

• What British mechanism did Carnegie invest in? Why?

• What was Carnegie’s stance on Trade Unions?

Andrew Carnegie dominated the US steel industry.

Carnegie kept his prices as low as possible and chose to constantly re-invest in new manufacturing plants and equipment. One example of machinery that he invested in was the Bessemer Converter which was a British piece of equipment used to make steel. This method of making steel however was much cheaper than Carnegie’s previous method.

Carnegie also refused to allow any unions to be set up in his factories and used his own armed guards to deal with any union activities.