Chapter 17 - Industrial Supremacy
Perhaps the most important technological development in a nation whose economy rested so heavily on railroads and urban construction was the revolutionizing of iron and steel production in the late nineteenth century.
Iron production had developed slowly in the United States through most of the nineteenth century; steel production had developed hardly at all by the end of the Civil War.
In the 1870s and 1880s, however, iron production soared as railroads added 40,000 new miles of track, and steel production made great strides toward what would soon be its dominance in the metals industry.
The story of the rise of steel is, like so many other stories of economic development, a story of technological discovery
The steel industry emerged first in western Pennsylvania and eastern Ohio.
That was partly because iron ore could be found therein abundance and because there was already a flourishing iron industry in the region
Until the Civil War, iron and steel furnaces were mostly made of stone and usually built against the side of a hill
As the steel industry spread, new transportation systems emerged to serve it.
The steel production in the Great Lakes region was possible only because of the availability of steam freighters that could carry ore on the lakes, which contributed to the development of new and more powerful steam engines.
Shippers also used new steam engines to speed the unloading of ore, a task that previously had been performed, slowly and laboriously, by men and horses.
A close relationship grew up between the emerging steel companies and the railroads.
Steel manufacturers provided rails and parts for railroad cars.
The Pennsylvania Railroad, for example, literally created the Pennsylvania Steel Company, provided it with substantial initial capital, and ensured it a market for its products with an immediate contract for steel rails.
The steel industry’s need for lubrication for its machines helped create another important new industry in the late nineteenth century—oil
Two technologies were critical to the development of the automobile. One was the creation of gasoline (or petrol).
The American automobile industry developed rapidly in the aftermath of these breakthroughs.
Charles and Frank Duryea built the first gasoline-driven motor vehicle in America in 1893.
Three years later, Henry Ford produced the first of the famous cars that would eventually bear his name.
By 1910, the industry had become a major force in the economy and the automobile was beginning to reshape American social and cultural life, as well as the nation’s landscape.
In 1895, there were only four automobiles on the American highways.
By 1917, there were nearly 5 million.
The search for a means of human flight was as old as civilization and had been almost entirely futile until the late nineteenth century, when engineers, scientists, and tinkerers in both the United States and Europe began to experiment with a wide range of aeronautic devices.
Among those testing gliders were two brothers in Ohio, Wilbur and Orville Wright, who owned a bicycle shop in which they began to construct a glider that could be propelled through the air by an internal combustion engine
In 1903, four years after they began their experiments, Orville made a celebrated test flight near Kitty Hawk, North Carolina, in which an airplane took off by itself and traveled 120 feet in 12 seconds under its own power before settling back to earth.
By the fall of 1904, the Wright brothers had improved the plane to the point where they were able to fly over 23 miles, and in the following year, they began to take a few passengers with them on their flights.
Although the first working airplane was built in the United States, aviation technology was slow to gain a foothold in America.
Most of the early progress in airplane design occurred in France, where there was substantial government funding for research and development.
The U.S. government created the National Advisory Committee on Aeronautics in 1915, twelve years after the Wright brothers’ flight, and American airplanes became a significant presence in Europe during World War I.
But the prospects for commercial flight seemed dim until the 1920s
The rapid development of new industrial technologies encouraged business leaders to sponsor their own research to allow them to keep up with the rapid changes in the industry.
General Electric, fearful of technological competition, created one of the first corporate laboratories in 1900.
American universities in the late nineteenth and early twentieth centuries developed a growing connection between university-based research and the needs of the industrial economy.
University faculty and laboratories began to receive funding from corporations for research, and a partnership began to develop between the academic world and the commercial world that continued into the twenty-first century
The most important change in production technology in the industrial era was the emergence of mass production and, above all, the moving assembly line, which Henry Ford introduced in his automobile plants in 1914.
This revolutionary technique cut the time for assembling a chassis from 12½ hours to 1½ hours.
It enabled Ford to raise the wages and reduce the hours of his workers while cutting the base price of his Model T from $950 in 1914 to $290 in 1929.
Ford’s assembly line became a model for many other industries.
Despite important advances in many other forms of technology and communication, the principal agent of industrial progress in the late nineteenth century remained the railroad.
Railroads were the nation’s principal form of transportation.
They helped determine the path by which agricultural and industrial economies developed.
When railroad lines ran through sparsely populated regions, new farms and other economic activity quickly sprang up along the routes
Railroads even altered concepts of time.
Until the 1880s, there was no standard method of keeping time from one community to another.
In most places, the position of the sun determined the time, which meant that clocks were set differently even between nearby towns.
This created great difficulties for railroads, which were trying to set schedules for the entire nation.
On November 18, 1883, the railroad companies, working together, agreed to create four time zones across the continent, each an hour apart from its closest neighbor.
Although not until 1918 did the federal government make these time zones standard for all purposes, the action by the railroads very quickly solidified the idea of “standard time” through most of the United States.
Every decade in the late nineteenth century, total railroad trackage increased dramatically
There had been various forms of corporations in America since colonial times, but the modern corporation emerged as a major force only after the Civil War, when railroad magnates and other industrialists realized that no single person or group of limited partners, no matter how wealthy, could finance their great ventures
The Pennsylvania Railroad and others were among the first to adopt the new corporate form of organization.
But it quickly spread beyond the railroad industry
Isaac Singer patented a sewing machine in 1851 and created I. M. Singer and Company, one of the first modern manufacturing corporations.
Many of the corporate organizations developed a new approach to management.
Large, national business enterprises needed more-systematic administrative structures than the limited, local ventures of the past
Beginning in the railroad corporations, these new management techniques moved quickly into virtually every area of large-scale industry.
Efficient administrative capabilities helped make possible another major feature of the modern corporation: consolidation.
Businessmen created large, consolidated organizations primarily through two methods.
The consolidation of many different railroad lines into one company as an example.
Another method, which became popular in the 1890s, was “vertical integration”—the taking over of all the different businesses on which a company relied for its primary function
Rockefeller and other industrialists saw consolidation as a way to cope with what they believed was the greatest curse of the modern economy: “cutthroat competition.”
Most businessmen claimed to believe in free enterprise and a competitive marketplace, but in fact, they feared the existence of too many competing firms, convinced that substantial competition could spell instability and ruin for all
The failure of the pools led to new techniques of consolidation, resting less on cooperation than on centralized control.
At first, the most successful such technique was the creation of the “trust”
But the trust was in fact a particular kind of organization.
Under a trust agreement, stockholders in individual corporations transferred their stocks to a small group of trustees in exchange for shares in the trust itself.
In 1889, the State of New Jersey helped produce the third form of consolidation by changing its laws of incorporation to permit companies to buy up other companies
By the end of the nineteenth century, as a result of corporate consolidation, 1 percent of the corporations in America were able to control more than 33 percent of the manufacturing
Whether or not this relentless concentration of economic power was the only way or the best way to promote industrial expansion became a major source of debate in America.
But it is clear that, whatever else they may have done, the industrial giants of the era were responsible for substantial economic growth.
They were integrating operations, cutting costs, creating a great industrial infrastructure, stimulating new markets, creating jobs for a vast new pool of unskilled workers, and opening the way to large-scale mass production.
They were also creating the basis for some of the greatest public controversies of their era.
The most common rationale for modern capitalism rested squarely on the older ideology of individualism.
The new industrial economy, its defenders argued, was not reducing opportunities for individual advancement, but expanding them.
It was providing every individual with a chance to succeed and attain great wealth.
Before the Civil War, there had been few millionaires in America; by 1892 there were more than 4,000.
Some were in fact what almost all millionaires claimed to be: “self-made men.”
But most of the new business tycoons had begun their careers from positions of wealth and privilege.
Industrialists made large financial contributions to politicians, political parties, and government officials in exchange for assistance and support.
And more often than not, politicians responded as they hoped
The average industrialist of the late nineteenth century was not, however, a Rockefeller or a Vanderbilt.
Perhaps the most important technological development in a nation whose economy rested so heavily on railroads and urban construction was the revolutionizing of iron and steel production in the late nineteenth century.
Iron production had developed slowly in the United States through most of the nineteenth century; steel production had developed hardly at all by the end of the Civil War.
In the 1870s and 1880s, however, iron production soared as railroads added 40,000 new miles of track, and steel production made great strides toward what would soon be its dominance in the metals industry.
The story of the rise of steel is, like so many other stories of economic development, a story of technological discovery
The steel industry emerged first in western Pennsylvania and eastern Ohio.
That was partly because iron ore could be found therein abundance and because there was already a flourishing iron industry in the region
Until the Civil War, iron and steel furnaces were mostly made of stone and usually built against the side of a hill
As the steel industry spread, new transportation systems emerged to serve it.
The steel production in the Great Lakes region was possible only because of the availability of steam freighters that could carry ore on the lakes, which contributed to the development of new and more powerful steam engines.
Shippers also used new steam engines to speed the unloading of ore, a task that previously had been performed, slowly and laboriously, by men and horses.
A close relationship grew up between the emerging steel companies and the railroads.
Steel manufacturers provided rails and parts for railroad cars.
The Pennsylvania Railroad, for example, literally created the Pennsylvania Steel Company, provided it with substantial initial capital, and ensured it a market for its products with an immediate contract for steel rails.
The steel industry’s need for lubrication for its machines helped create another important new industry in the late nineteenth century—oil
Two technologies were critical to the development of the automobile. One was the creation of gasoline (or petrol).
The American automobile industry developed rapidly in the aftermath of these breakthroughs.
Charles and Frank Duryea built the first gasoline-driven motor vehicle in America in 1893.
Three years later, Henry Ford produced the first of the famous cars that would eventually bear his name.
By 1910, the industry had become a major force in the economy and the automobile was beginning to reshape American social and cultural life, as well as the nation’s landscape.
In 1895, there were only four automobiles on the American highways.
By 1917, there were nearly 5 million.
The search for a means of human flight was as old as civilization and had been almost entirely futile until the late nineteenth century, when engineers, scientists, and tinkerers in both the United States and Europe began to experiment with a wide range of aeronautic devices.
Among those testing gliders were two brothers in Ohio, Wilbur and Orville Wright, who owned a bicycle shop in which they began to construct a glider that could be propelled through the air by an internal combustion engine
In 1903, four years after they began their experiments, Orville made a celebrated test flight near Kitty Hawk, North Carolina, in which an airplane took off by itself and traveled 120 feet in 12 seconds under its own power before settling back to earth.
By the fall of 1904, the Wright brothers had improved the plane to the point where they were able to fly over 23 miles, and in the following year, they began to take a few passengers with them on their flights.
Although the first working airplane was built in the United States, aviation technology was slow to gain a foothold in America.
Most of the early progress in airplane design occurred in France, where there was substantial government funding for research and development.
The U.S. government created the National Advisory Committee on Aeronautics in 1915, twelve years after the Wright brothers’ flight, and American airplanes became a significant presence in Europe during World War I.
But the prospects for commercial flight seemed dim until the 1920s
The rapid development of new industrial technologies encouraged business leaders to sponsor their own research to allow them to keep up with the rapid changes in the industry.
General Electric, fearful of technological competition, created one of the first corporate laboratories in 1900.
American universities in the late nineteenth and early twentieth centuries developed a growing connection between university-based research and the needs of the industrial economy.
University faculty and laboratories began to receive funding from corporations for research, and a partnership began to develop between the academic world and the commercial world that continued into the twenty-first century
The most important change in production technology in the industrial era was the emergence of mass production and, above all, the moving assembly line, which Henry Ford introduced in his automobile plants in 1914.
This revolutionary technique cut the time for assembling a chassis from 12½ hours to 1½ hours.
It enabled Ford to raise the wages and reduce the hours of his workers while cutting the base price of his Model T from $950 in 1914 to $290 in 1929.
Ford’s assembly line became a model for many other industries.
Despite important advances in many other forms of technology and communication, the principal agent of industrial progress in the late nineteenth century remained the railroad.
Railroads were the nation’s principal form of transportation.
They helped determine the path by which agricultural and industrial economies developed.
When railroad lines ran through sparsely populated regions, new farms and other economic activity quickly sprang up along the routes
Railroads even altered concepts of time.
Until the 1880s, there was no standard method of keeping time from one community to another.
In most places, the position of the sun determined the time, which meant that clocks were set differently even between nearby towns.
This created great difficulties for railroads, which were trying to set schedules for the entire nation.
On November 18, 1883, the railroad companies, working together, agreed to create four time zones across the continent, each an hour apart from its closest neighbor.
Although not until 1918 did the federal government make these time zones standard for all purposes, the action by the railroads very quickly solidified the idea of “standard time” through most of the United States.
Every decade in the late nineteenth century, total railroad trackage increased dramatically
There had been various forms of corporations in America since colonial times, but the modern corporation emerged as a major force only after the Civil War, when railroad magnates and other industrialists realized that no single person or group of limited partners, no matter how wealthy, could finance their great ventures
The Pennsylvania Railroad and others were among the first to adopt the new corporate form of organization.
But it quickly spread beyond the railroad industry
Isaac Singer patented a sewing machine in 1851 and created I. M. Singer and Company, one of the first modern manufacturing corporations.
Many of the corporate organizations developed a new approach to management.
Large, national business enterprises needed more-systematic administrative structures than the limited, local ventures of the past
Beginning in the railroad corporations, these new management techniques moved quickly into virtually every area of large-scale industry.
Efficient administrative capabilities helped make possible another major feature of the modern corporation: consolidation.
Businessmen created large, consolidated organizations primarily through two methods.
The consolidation of many different railroad lines into one company as an example.
Another method, which became popular in the 1890s, was “vertical integration”—the taking over of all the different businesses on which a company relied for its primary function
Rockefeller and other industrialists saw consolidation as a way to cope with what they believed was the greatest curse of the modern economy: “cutthroat competition.”
Most businessmen claimed to believe in free enterprise and a competitive marketplace, but in fact, they feared the existence of too many competing firms, convinced that substantial competition could spell instability and ruin for all
The failure of the pools led to new techniques of consolidation, resting less on cooperation than on centralized control.
At first, the most successful such technique was the creation of the “trust”
But the trust was in fact a particular kind of organization.
Under a trust agreement, stockholders in individual corporations transferred their stocks to a small group of trustees in exchange for shares in the trust itself.
In 1889, the State of New Jersey helped produce the third form of consolidation by changing its laws of incorporation to permit companies to buy up other companies
By the end of the nineteenth century, as a result of corporate consolidation, 1 percent of the corporations in America were able to control more than 33 percent of the manufacturing
Whether or not this relentless concentration of economic power was the only way or the best way to promote industrial expansion became a major source of debate in America.
But it is clear that, whatever else they may have done, the industrial giants of the era were responsible for substantial economic growth.
They were integrating operations, cutting costs, creating a great industrial infrastructure, stimulating new markets, creating jobs for a vast new pool of unskilled workers, and opening the way to large-scale mass production.
They were also creating the basis for some of the greatest public controversies of their era.
The most common rationale for modern capitalism rested squarely on the older ideology of individualism.
The new industrial economy, its defenders argued, was not reducing opportunities for individual advancement, but expanding them.
It was providing every individual with a chance to succeed and attain great wealth.
Before the Civil War, there had been few millionaires in America; by 1892 there were more than 4,000.
Some were in fact what almost all millionaires claimed to be: “self-made men.”
But most of the new business tycoons had begun their careers from positions of wealth and privilege.
Industrialists made large financial contributions to politicians, political parties, and government officials in exchange for assistance and support.
And more often than not, politicians responded as they hoped
The average industrialist of the late nineteenth century was not, however, a Rockefeller or a Vanderbilt.
