Economic Change + Development

Question 1

net importer to net exporter

Answer 1

• by the early 1890s, the us was still a net importer - this changed after the ‘Second Industrial Revolution’
• 1895 - 1913 the economy achieved ‘take off’ - two intense surges in American manufactured exports
• first an increase of 90% between 1895 + 1900
• then 77% 1908-1913
• by 1913 US was a net exporter

Question 2

Examples of US exports

Answer 2

• iron - discovery of high-grade iron ore in the Messabe range of hills in Minnesota 1892
• steel - went up by 400% in 1913 - US steel
• oil - 1910 US oil production equalled that of the rest of the world combined

Question 3

What caused the second Industrial Revolution?

Answer 3

• efficiency = US industries had higher productivity through technological advances
• influx of immigration
• vast natural resources
• favourable political circumstances - limited regulation of businesses due to long period of Republican dominance from 1896 to 1912

Question 4

Discovery of new oil fields

Answer 4

• huge new oilfields in Oklahoma, California + Texas expanded the position of US as the worlds leading oil producer

Question 5

Developments of agriculture

Answer 5

• the rural economy remained highly significant in the US
• world leader in the production of wheat, corn + other grains
• US produced 25% of world’s wheat supply by 1900
• cotton was still the foundation of the economy in the south - King Cotton - forming 19.2% of US exports in 1900

Question 6

Problems with agriculture

Answer 6

• 1893 Panic intensified problems in the agriculture
• small farmers in south + west facing economic problems with falling prices + a shortage of credit
• agricultural economy became reliant on railroads + the wider commercial network it bought with it
• dependent on railroad companies + banks in order to invest in seed, livestock etc. = making them vulnerable to market changes

Question 7

Agriculture in the south

Answer 7

• tobacco, sugar + cotton still provided the basis of southern economy
• the promises to empower black farmers was not fulfilled - most remained trapped in sharecropping
• small white farmers were only a little better off - struggling to raise finances needed to invest in improved methods

Question 8

End of ‘easy credit’

Answer 8

• the success of early years was fuelled by readily available ‘easy credit’ - loans from banks + land companies that were based on unrealistic expectations that farmers would be able to pay them
• credit boom subsided = small farmers deep in debt
• the swell of protests from western + southern farmers lead to the rise of populism

Question 9

‘Golden age’ of agriculture

Answer 9

• after 1900 there was dramatic improvements in the situation for American farmers - expanding domestic economy boosted the demand for agricultural production
• exports increased, modernisation + mechanisation spread more widely
• boosted by outbreak of WWI in 1914
• Reclamation Act 1902 = irrigation schemes in arid areas
• Federal Farm Loan Act 1916

Question 10

Impact of economic change

Answer 10

• rapid urbanisation = population of NYC doubled from 1890 to 1910
• regional differences
• rise of big businesses

Question 11

Southern economy

Answer 11

• development of oil industry in Texas + Louisiana
• continued to be dominated by plantation products - above all King Cotton
• urbanisation moved more slowly + on a smaller scale than industrial northeast

Question 12

Western economy

Answer 12

• distant + isolated
• dominated by extractive industries - subject to booms + busts
• heavily dependent on eastern financial interests for investment
• late 1890s Alaska-Yukon Gold Rush - stimulated rapid development of pacific coast ports - Seattle + San Francisco - sparking interest in the west
• war against Spain + increasing trade with China also boosted west coast ports - San Francisco became an important centre for shipbuilding

Question 13

What made economic change not smooth or continuous?

Answer 13

• extensive pockets of poverty in many big cities
• industrial unrest = industrial workers responded to low wages + harsh conditions by organising trade unions + resorting to strike action
• two major financial crises - Panics of 1893 + 1907

Question 14

Strikes

Answer 14

• At Homestead in Pennsylvania 1892 = 13 steelworkers were killed in a pitched battle against strike-breakers brought in by the Carnegie Steel company
• Pullman Strike 1894 - widespread railroad strike that disrupted traffic in the Midwest - first time federal govt. used an injunction to break strike (Cleveland pres.)
• Pullman strike happened due to a 25% cut on already low wages due to the depression from 1893

Question 15

Impact of Panic of 1893

Answer 15

• slowed down the railroad boom = sudden bankruptcy of the Philadelphia + Reading Railroad
• gold reserves were already falling before 1893 + the money supply was insufficient to finance the scale of economic activity
• stock market collapsed + hundreds of banks failed
• general economic slump that lasted three years

Question 16

Cause of panic of 1907

Answer 16

• was a period of relatively slow growth in between the surges of 1895-1900 + 1908-1913 + the banking system was struggling to keep pace with expansion of industry
• triggered by the crash of the third largest trust in New York - Knickerbocker Trust Company

Question 17

Impact of 1907 panic

Answer 17

• at the time there was no central bank to prop up the banking system
• things would have spiralled out of control without the intervention of JP Morgan who put up millions of dollars to restore business confidence + prompted other financiers to do the same
• unlike the panic of 1893 it was over pretty quick
• but it was a warning sign of the weakness of regulations of the banks + the power big financiers held over the govt.

Question 18

Impact of WWI

Answer 18

-large spending on war supplies by Britain + allies stimulated rapid growth in American industry + agriculture
- firms such as US steel + Baldwin Locomotive Company expanded production to full capacity
- Baldwin produced 5500 military locomotives + 6 million artillery shells for the Allies 1914-1918

Question 19

Economic impact of immigration

Answer 19

• many were economic migrants drawn to the US by promise of work + better life
• provided a vast pool of labour + huge number of domestic consumers to fuel the economic boom
• most of the migrants became urban dwellers - population explosion in American cities

Question 20

Opposition to Big Business by 1890

Answer 20

• granger movement
• knights of labour - nationwide trade union movement with more than 10,000 followers by the 1880s
• interstate commerce act 1887 - set up to investigate + regulate railroad companies
• Sherman anti-trust act passed in 1890

Question 21

Who were the ‘wealthy criminal class’

Answer 21

• often said 20 men controlled American industry + finance through corporate trusts + monopolies
• the riches of the business elite made them easy targets by progressives -
• Rockefeller - standard oil = 200 mil, he became world’s first billion air in 1913
• Andrew Carnegie - sold his steel empire for 480 mil in 1901