lassiez faire attitude Flashcards
Reasons for industrial growth
- impact of the civil war
- availability of land
- population growth
- availability of capital
- corporations and trusts
- transports
- technological advancements
Impact of the civil war
- stimulated the demand for manufactured goods and methods of distribution to be developed
- the US had to raise money for the civil war so the developed a sophisticated capital system
availability of land
- the US expanded due to westward expansion, this stimulated the expansion of railroads and markets
- the land to the west was very fertile so wheat production grew rapidly
population growth
- lower death rates and an improvement of public health and better quality food
- immigration, 10 million between 1860-90 providing cheap labour force this stimulated the economic growth
transport
- 1869 the first transactional railroad opened up from NY to San Fran which changed the time from 6 months to 6 days
- between 1868-1873, 53,000 km of track had been laid
- this also needed lots of workers, encouraged the demand for iron and steel
corporations and trusts
- emerged due to lack of government regulation
- could own a number of businesses and then buy,sell and own property to take over even more business
- trusts was the model for massive expansion as it avoided the state laws of not owning shares in multiple companies.
technological innovations
- Carnegie was a key person in this due to the steel becoming costly to produce, however in britian there was a cheaper method to produce it called the Bessemer. Carnegie then brought this over from the UK to the US and used this to keep him prices of steel as low as possible, making his business grow rapidly.
Vanderbilt and railroads
among the first to replace iron rails with lighter steel rails, this swelled their fortune to $100 million, then in 1877 he died and left his money to his son William who ruthlessly manipulated labour which made him very unpopular but increased his family fortune so when he died in 1885 he was the richest man in the world.
JP Morgan and finance
skill-full financier who had major force behind the creation of large companies. in 1871 he began his pwn private banking company which was later known as JP Morgan & CO. he was very popular in the media as he was very criticised for his high life.
JD Rockerfeller and Oil
brought his first oil refinery in 1862, 8 years later he set up standard oil. he eliminated competitors by using fixed prices and paid close attention to manufacturing processes and negotiated with lots of skill. in 1913 he was the worlds first billionaire but was also a philanthropist as he gave away $500,000,000 to charity.
Carnegie and steel
originally from Scotland, he brought over the cheap way of producing steel to the US from the UK and made his millions by keeping prices low.
Impact of economic growth
- 1873 Depression
- Urbanisation
- living conditions
- agriculture
1873 depression
- anyone could open and run a bank independently, this meant that there were lots of small banks around the US. the smaller banks would keep deposits in the larger banks but then the larger banks would invest these deposits into companies that often go bankrupt, so lots of money was going to waste.
- The NY stock exchange was also closed for 10 days so credit dried up, factories closed and thousands were laid off. 1/4 labourers were unemployed
urbanisation
before 1860 there were only 16 cities with a population of 50,000. Then by 1890 the population increased by 30% and industry increased which meant there was a rise in cities and towns.
living conditions
due to the rapid increase of population, overcrowded slums were also rising. the ‘boss’ system was set up however it was very corrupt, this was where the highest local bidder was provided housing and transport.