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The Global Economy > The Second Industrial Revolution (covers America’s Rise But Mainly Victorian Britains Fall) > Flashcards

The Second Industrial Revolution (covers America’s Rise But Mainly Victorian Britains Fall) Flashcards

1
Q

The 2nd IR looks at US rise, and why Victorian Britain failed.

US saving rates, foreign investment, and trade balance?

(LaFeber)

A

High saving rates: 10-12% 1850s to 18-20% 1864-1914

Foreign investment- $3bn US compared to to $1.5bn in Britain

Became huge net exporter

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2
Q

US key industry were electricity, steel and fuel

Metals facts (2)

A

Iron and steel, replaced cotton for most important export to Russia. (Through rail, bridges, cars etc)

1902 - US produced more iron and steel than Britain and Germany combined

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3
Q

US continued (oil) (2)

A

Petroleum products- 4th largest US export

Engine development-35hp to 1000hp 1893-1900 (rapid speed of innovation in US)

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4
Q

US new market structure characteristics (4)

A

Emergence of MNC
-became better at gathering investment

Policy events facilitating the success of MNCS

Availablility of labour

Protectionism

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5
Q

2 policy events facilitating success of MNCs in the new US market structure.

A

Sherman Anti-Trust Act: 1890
-limited anti-competitive measures (firms merged to avoid)

Gold standard adoption 1879
-eliminated currency risk (increased certainty-stimulating trade)

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6
Q

Availability of labour facilitating corporation success (2)

A

Immigrants to US increased

Increased efficiency, only most efficient firms survived, prices fell steadily.

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7
Q

US immigration from (1821-1924)

A

33,188,000

33 million.

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8
Q

Protectionism facilitating success (2)

A

1870 Tariff protected iron and steel

Producers gave back generously to protectionist politicians.

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9
Q

So overall, 4 contributions to the new market structure (just covered)

A

Emergence of MNCs

Policy events facilitating the success of MNCs

Availability of labour

Protectionism

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10
Q

Key industries in Southern US and what happened in the South.

  1. South’s double dependence
A

Cotton

Tobacco

A reconstruction occurred. Big corporations and capital flowed South. Began to produce its own resources with their own machinery. e.g cotton mills, now they produce theirselves (used to send to Britain to produce) which is cheaper, opening new export markets in Asia and Latin America.

So South had a double dependence: North for their capital, Asia and LA for exports.

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11
Q

Did Victorian Britain (1870-1913) fail? We have to define failure, 2 possible criteria

A

Fail relative to historic performance?

Fail relative to other countries?

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12
Q

What was Britain 1850-1870 known as

A

Mid Victorian success- Workshop of the world

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13
Q

Workshop of the world characteristics (3)

(Hint: manufactured goods, rich, GFC)

A

Produced 1/3 of manufactured goods, and controlled 40% of world trade in manufactured goods

Richest-twice GDP per capita of EU

Global financial centre

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14
Q

What was Britain in 1870s known as

A

WW1: Later-Victorian Failure (Penalties of Early Start)

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15
Q

WW1: Later-Victorian Failure (Penalties of Early Start) (3)

Hint: GDP, manu, % of manu change

A

GDP growth slowed while US and Germany grew

German overtook in manufacturing

Britain manufacturing share fell to 25% (was 40% as shown earlier)

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16
Q

Causes of Victorian Britain failure

A

Overcommitment

Too much capital abroad

Poor education

Banking failures

Business/labour market failures

17
Q

1st cause of failure:

Overcommitment to 1st Industrial Revolution (4)

A

Over-invested, stuck in traditional low productivity industries

Tariff protection required to restructure industry, but free trade existed. (Unlike America)

18
Q

Support for overcommitment (2) and overall evaluation

A

Great Depression destroyed previous policies and institutions

Reforms of the old structures mentioned occurred finally in 1980s with Thatcher, which showed rapid growth, so why couldn’t Britain do this in 1870?

Overall, difficult to blame Britain for overcommitting to first IR industries, first mover disadvantage was not our fault

19
Q

2nd cause of failure:

Too much capital abroad

A

Lots of foreign capital investment, could’ve been used for domestic K accumulation e.g built domestically not in Singapore

Social returns to investment domestically high e.g building universities etc, but private returns were prioritised as they were high abroad e.g building rail in America

20
Q

App: how much actually went abroad relative to total investment

A

1/3 of Britain’s investment went abroad, far greater than US and Germany, when we all had similar savings rates!!

21
Q

3rd cause of failure:

Failures in banking (3 points)

A

Clearing banks inefficient

Stock market inefficient

New industry bias

22
Q

Clearing banks inefficient (2)

A

-unable to supply long run finance

-concentrated and centralised (small banks combined) meaning less flexibility, so less lending, only short term lending

23
Q

Why Stock market inefficient

A

Stock exchange wanted issues of 1m+, small/medium firms were priced out (as had to be of a certain size, so couldn’t receive share capital to invest)

24
Q

New industry bias and example

A

Bias against new industries as risky.

Nearly all new electrical engineering companies failed within 5 years in 1880.

25
Q

4th cause of failure in Britain:

Poor education- compare to Germany

A

Elementary education compulsory was late.
-Britain 1870
-Germany 1800

Secondary education deficiencies
-no science, Germany taught modern subjects (science)
-we took classic

Tertiary education
-universities in Britain taught classical, Oxbridge only taught Latin.
-civic unis taught science but only 1213 graduated in 1910 compared to German-17000 science graduates in 1910.

26
Q

5th cause of failure in Britain:

Business/labour market failure: 2 arguments

A

Industrial structure

Labour market

27
Q

Industrial structure part 1:

Atomistic competition in Britain (3)

A

Large number of firms
Small market share for firms
Lack of R&dD

28
Q

Industrial structure part 2:

Corporate capitalism- US & Germany (4)

A

Small number of large firms (oligopoly)
Large market share
Vertical integration
Advanced marketing
R&D

29
Q

Industrial structure part 3:

Managerialism and mass production (Chandler)

A

Britain slow to understand- no separation of ownership and management

30
Q

Labour market characteristics

A

Unions developed (44% of workers unionised by WW1)

Higher wages- a problem

31
Q

Main issue with unions (4)

A

Constraints on management choices regarding production techniques and technology

British unions wouldn’t play fair- American unions agreed to new tech if given share of profits. Ours didn’t agree to that.

Key industries suffered-cotton spinners in Britain organised to control pay and job hierarchy

Collective bargaining was not industry wide but Union specific, contrasted to US and Germany

32
Q

Flash card summary

A

US characteristics (savings, FDI, exporter)

US key industries and stats and facts

US market structure characteristics (MNC, Policy, Labour, Protectionism)

Southern reconstruction.

Workshop of World>Penalties of early start and their characteristics.

Causes of Victorian failure (overcommitment, FDI, poor ed, banking, business/labour market failures)

The Global Economy (31 decks)

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