Industrialization can be briefly defined as:
The development of social organizations, generally in nation-states in which large manufacturing enterprises loom large and in which adjunctive legal institutions supporting laissez-faire philosophies of market relationships and providential public and private services grow with tandem.
Therefore, industrialization should be discussed in the context of economic, social and political factors: conditions in which technological innovations have their full impact on the transformation of economy. It is impossible to elucidate industrialization in Post-Civil War America and not to involve all this vast number of factors that influenced its development. If one would try to define it solely in the context of technological discoveries, it would provide a very superficial explanation; neglecting other factors would eventually lead to the dangerous path of telling historical untruth. The truth is that industrialization is much more complex, although it could not happen in this form without its technical inventions that made the 21st century world possible. For example, the creation of industrial society would not take this shape without significant discoveries of new managerial practices that set the basis of modern capitalistic society: the prevailing economic system of nowadays, of which America is the most superb example.
There is no doubt that this topic would deserve discourse of a much larger extent. Concerning the restrictions of space that has been given to me, I will not be able to present a wider context of the Post-Civil War industrialization. I find it most important to present its frame and historical background, its most important characteristics and its legacies. I will also try to include the most prominent cultural and social changes, focusing on the ones I find to be the most essential.
Industrialization, Incorporation and Development of Capitalist Economy
In the Post Civil-War era, the United States experienced most rapid and intensive industrialization and urbanization. The factor of war should not be excluded: the war needs significantly stimulated country’s economy, especially iron and steel industry that continued to flourish after its end. The development of technology combined with vast raw material deposits (at the beginning, coal, then iron and oil) contributed to the growing power of the nation, completely transforming its economy, including the economic system itself.
Discussing the backgrounds of Industrialization process, it is important to mention that American Post-Civil War industrialization, considering roughly period between years 1865 and 1900, took place in a “laissez-faire” capitalist environment. It is not that this environment was artificially created, newly developed capitalist relations created such conditions. In this early phase of its development, economic relationships were not yet well developed, which made enough room for unscrupulous practice and exploitation of labor. People who had benefit from such conditions advocated the policy of economic liberalism, or “laissez-faire economics”. In French Laissez-faire means leave to do, and the Scottish economist Adam Smith is to be given credit for popularizing the term in the 19th century.
His famous work The Wealth of Nations (1776) had great influence in 19th century economic thought. Adam Smith explains that the best way in which the economic growth can be stimulated is to let the individual initiative to operate freely and pursue its self-interest, and that the personal progress of that initiative will lead to the benefit of society as a whole. Opposing the principle of economic interventionism laissez-faire doctrine advocates the minimum necessary interference of government. Economic laws of free competition should act as an “invisible hand” that will maintain a certain order in economy.
The personal greed element that Adam Smith mentions in his philosophy had immense power in the development of industrial economy in Post Civil-War America. Entrepreneurs’ greed did lead to economic growth; however, it did not lead to the benefit of whole society but to the progress of a few. During the Post Civil-War industrialization period in United States, a small number of corporate giants came to dominate whole industries, took over the market and destroyed many smaller businesses that were swallowed by their great competitors. Avoidance of governmental regulations (which was always advocated by unscrupulous industrialists) led to exploitation of labor and turned out to be completely inadequate in solving numerous social problems. The most important social change that this period has brought was undoubtedly the rise of a new, numerous working class, in contrast to a small-numbered class of capitalists, and the increased social gap of this newly created industrial society.
The development of railroads was of extreme importance from the earliest period of industrialization. They stimulated the settlement of the West, the trade, and railroad companies influenced the economy by inventing new managerial practices and pioneering the consolidations of smaller businesses. Thus, the incorporation of America came along with its industrialization and the development of the capitalist economic system.
Railroads and New Managerial Practices
Hoping to encourage settlement and exploitation of resources in the West the U.S. government promised railroad companies 20 square miles on the both sides of the tracks for every mile of it laid. The result was that, between 1965 and 1900, railroad lines increased from 35,000 to 192,000 miles, which was more than the whole Europe had at the time. Only four years after the Civil War, with the meeting of Union Pacific and Central Pacific railway at Promontory Point in Utah, the first Transcontinental Railroad was completed. It united the country physically, opened vast lands for cultivation and for investors vast raw materials deposits such as coal, oil and iron. As railroad companies had their interest in creating future customers for their services, they endeavored to settle the areas where their tracks were laid.
Promontory Point, Utah. May 10, 1869
On May 10th, 1869 New York Times wrote:
The inhabitants of the Atlantic seaboard and the dwellers on the Pacific slopes are henceforth emphatically one people… The new highway thus opened to man will… develop the resources, extend the commerce, increase the power, exalt the dignity and perpetuate the unity of our Republic…
Railroad companies thus made fortunes and grew in size. They gained such economic power that they started to influence state and federal governments. It is not surprising then that it was the railroad companies that started developing new managerial practices, such as selling stocks to raise the needed capital. They first started creating trusts, which were the most primitive forms of joining companies that free market’s laws of competition imposed on them. Some of these railroad entrepreneurs were the first to start a policy or buying and consolidating their weaker and smaller competitors. Other industries followed the example and started adopting these practices.
Rise of Corporations
The rise of the corporation U.S Steel is one of the best examples how great corporations were created in this period. One of its founders Andrew Carnegie came to the U.S. from Scotland at the age of 12. After getting experience in railroad industry and making farsighted investments he was the first to apply new railroad managerial practices in iron industry, that is, integrating his business both horizontally and vertically. After his Carnegie Steel was sold to banker J.P. Morgan, the newly created U.S. Steel company was the first corporation in the U.S. to capitalize over 1 billion dollars. Other industries followed the examples of railroads as well, and soon, a great number of small businesses competing for the market were replaced by oligopoly, an economy dominated by a few corporate giants. Thus, the downfall of small business contributed to the rise of working class.
Andrew Carnegie’s best customers were railroad companies. The steel industry transformed the country finding application in building industrial machines and skyscrapers. The rise steel industry in the U.S. also marked the beginning of capital goods: the production of goods which are used in production of other goods. By 1890 the United States took the first position in the world in steel manufacture due to its cheap labor, abundance of raw materials, as well as the discovery of Bessemer process that made high quality steel production possible.
In the mid 1890 the internal combustion engine and automobile were invented, creating great public demands for oil. It led John D. Rockefeller, the famous entrepreneur, to develop his Standard Oil company in the same way as Carnegie: through horizontal and vertical integration of business, and further on, to expand to other business as well, such as meat, harvest, tobacco, leather etc…
Technological Revolution and Industrial Revolution
Industrialization generally connotes the idea of a “process of converting to a socioeconomic order in which industry is dominant.” Thus, this process leads a society through a transition of social and economic changes that are mutually conditioned. Post Civil-War industrialization brought great changes to the everyday life of an American: new transport and building methods changed the living conditions dramatically.
Implementation of new technology and usage of machines that cut the production costs brought a revolution in industry that lasted until the first decade of the 19th century, and at the same time the beginning of serial production marked the start of modern capitalism. New inventions between years 1860 and 1900 were the most important factor in the United States industrialization; however, the role of entrepreneurs should not be neglected. Without their enrollment and capital many of these inventions would have probably been lost.
In his book The Rise of Industrial America the author Page Smith tries to explain the technological revolution of this era: “For one thing, the entrepreneurial spirit (or, more simply, the desire to make as much money as possible), a spirit which existed from the beginning of the Republic… appeared to be a passion without limits… “. Indeed, between years 1860 and 1890 440,000 patents were issued, but it is important to know that great historical changes are always conditioned by environment, and that everything that was accomplished in the field of science was reciprocally conditioned. The entrepreneurial spirit or greed could have also been important factors, but such a progress would not be possible without being tightly linked with adequate social and cultural factors. For example, the development of communications and transport certainly lead to the spreading of technical knowledge. It is said that “need is the mother of invention”, but in the context of American industrialization, the saying could be understood also in a sense of “a need for more profit”, since companies that made fortunes on inventions normally invested into further research and stimulated innovations.
In discussion of inventions in this period it is important to mention inventions that were in the domain of telecommunications. In first years after the Civil War of great importance was electrical telegraphy perfected by Samuel F.B. Morse in 1844. The invention of telephone of 1876 by Alexander Graham Bell had significantly sped up information exchange and had truly enormous impact on both economic and industrial development. In brief period it became so popular in the U.S., that within a half century 16 million telephones were installed. Among the most important inventions that also stimulated business were the inventions of typewriter in 1867, of the adding machine in 1888, and of the cash register in 1897.
Among the most eminent innovators of the period was Thomas Edison, who was particularly celebrated for perfecting the light bulb; however, the use of electricity for lightening developed slowly. Edison is also given credit for the invention of phonograph, mimeograph, dictaphone, motion picture camera and film. Of great significance was also Nikola Tesla’s work: his electric motor invention replaced steam engine in factories. Entrepreneurs of the period also perfected techniques of mass production, while electric railway and electric dynamo significantly stimulated urbanization. Numerous implements that were discovered for gas rapidly increased its demand.
Industrialization brought great changes to the United States in the period after 1865 and made America a leading world power. However, the price of it was great pollution of the environment, increased social differences between classes, the poverty and vulnerability of the newly created working class. In this early stage of the development of capitalism, the society has divided into high, middle and massive working class that worked long hours for extra profit that was accumulated into the hands of industrialists.
The social gap between classes increased as the economy of many small businesses was replaced by oligopoly. The development of railroad companies that stimulated trade and its consolidating into large enterprises was followed by the rise of corporations in all other industries. Inventions followed the ideas for better quality of products and quality of life, while companies that made fortunes on inventions financed scientists and innovations. Notably, innovations reduced the demand for working power in agriculture as well, while factories in cities needed workers. Thus massive Post Civil-War industrialization and its inventions caused fast urbanization and changed the demographic image of the country. Apart of such indirect factors that changed the nation, many inventions such as telephone had a straightforward impact on the lives of Americans.
The industrialization in United States, however, was not of local character: it left an enormous legacy to nowadays world and its effects are visible in every sphere of modern civilization. It came along with scientific discoveries that had a great impact to the development of global civilization as well as the social world order, influencing lives of every nation, and thus, every inhabitant of the world.