A Giant Takes the World Stage

Cockefair Chair LectureThe Rise of American Industrialism

UMKC 10/28/14

William K. Black

Associate Professor of Economics and Law

University of Missouri – Kansas City

Theory of Development

Rule of Law & Institutions

Infrastructure

Innovation

Human capital

Natural resources/energy

Financial capital

Collectively, they produce Industrialization

Organization of our Talks

1. Emphasis on education and America’s overall economy up to 1914

2. The rise of the U.S. automobile industry to dominance

3. U.S. industries become dominant

Institution Building

“The rapid spread of public schooling across the continent during the 19th century is one of the most dramatic examples of institution-building in American history.”

Educational Paradoxes

“During most of the 19th century, the United States was overwhelmingly rural and nonindustrial. The apparatus of state control was extremely weak in most communities. Enrollments were generally higher in rural than in urban places, and high enrollments generally preceded industrialization.”

Capitalist Education?

“Scholars have looked for-and found-harbingers of corporate capitalism and a powerful state apparatus, especially in the urban-industrial Northeast and in urban educational systems.”

Education for Profit?

“Several studies of Massachusetts, in particular, have argued that bureaucratic urban education gave structural support to industrial capitalism (Field 1976) and that it was promoted largely by capitalist elites and their professional allies, who profited from the new economic and educational arrangements (Katz 1968).”

19th Century Changes

“The late 19th century was a period of growing governmental influence and consolidation of economic power. The pace of corporate mergers increased markedly about 1900. Huge new groups of immigrants were attracted to serve as laborers.”

Corporate Capitalism Evolves

“A new kind of corporate capitalism became dominant-one foreshadowed in mid-19th-century Massachusetts: urban, organized, and adept at expanding the state to accomplish its purposes in such domains as education….”

Nonindustrial & Rural

“The United States was overwhelmingly rural and nonindustrial until late in the 19th century. In 1860, only about 20% of Americans lived in communities with a population over 2,500. Even by 1900, only 40% lived in such places.”

It’s Not all Economics

“[T]he spread of schooling in the rural North and West can best be understood as a social movement implementing a commonly held ideology of nation-building. It combined the outlook and interests of small entrepreneurs in a world market, evangelical Protestantism, and an individualistic conception of the polity.”

Educated Before Industrial“Educational enrollments were high very early. [E]nrollment was already high in the settled Northeast before the ‘common school revival’ of the 1840s - averaging over 70% of whites aged 5-19 - and that the major achievement of the mid-century movement was the extension of public education to the western states (and to a much lesser extent, to the South)….”

Except in the South

“[B]y 1870, 58% of the children in the average state were enrolled in school. When the southern and border states are excluded, the figure rises to 76% and shows only modest further increases [up to 1930].”

Compulsory Attendance“State control was extremely weak. [O]nly 6% of the states had a compulsory attendance law by 1870. While this proportion rose rapidly (to 49% by 1890 and to 100% by 1920), most of the rise occurred after enrollment was almost universal in the northern and western states…. In 1890, the median size of state departments of education was only two, including the superintendent.”

High Rural Education

“[F]rom ages 5-14 children of northern farmers had school enrollment rates almost identical with those of nonfarmers' children but that for older children rural rates were considerably higher (58% compared with 38%, for those aged 15-19).”

Big but Peripheral“Mid-19th-century America was largely a nation of small entrepreneurs, of small units such as family farms competing in an expanding world market. As late as 1900, about 42% of the population still lived on farms. Until the development of corporate capitalism, most of America had been at the periphery of a world capitalistic system….”

An Ideology that Worked“This 19th-century American economy embodied a deeply rooted culture and economic ideology glorifying and rewarding quintessentially capitalistic perspectives: property, rational investment, technology, free labor, and

immense open markets (Foner 1970).”

Victorian Values

“Along with these economic tenets went complementary Victorian values of thrift in time and money, sobriety, temperance, competition, and order (Howe 1976). This class culture stressed production for long-distance markets, not "traditional" production for subsistence. [I]t drew on long-standing religious values and a congruent political ideology.”

A Concept of the Nation“These economic and cultural values were also embedded in a distinctive conception of nation-building. The polity of free agrarian capitalism was not to be consummated in a strong and bureaucratic state; rather, it was to be located in individuals and in the exchange relations of a free society. One main concern, as with other early forms of capitalism, was to limit the state.”

A Pure, Inclusive Polity“The polity was to be created in the hearts and minds of individuals, in the purified citizen-members of a redeemer nation. The concern of these nation-builders was not so much to control labor as to include everyone in their definition of the polity. Saved individuals, freed from the chains of sin and tradition and ignorance and aristocracy, were the carriers of political authority and meaning and responsibility.”

Martin Luther & Literacy“This conception of the republican polity was grafted onto a tradition of Protestant concern for the education of the individual that stretched back to the time of Martin Luther (literacy had been high in small Protestant societies such as Sweden, Scotland, and New England long before the American Revolution). This discussion, however, really applies only to the northern and western states.”

The Non-Inclusive South“There was an important exception to this theory of an individualistic, free, capitalistic polity: the slave South and its subsequent caste society. Southerners were deeply Protestant and also distrusted a centralized state, but the political economy of the South was in many respects sharply different. Plantation slavery and the caste system stymied the kinds of inclusive and millennial nation-building movements found in the North.

Controlling Black Workers

“In the southern version of agrarian capitalism, labor control was a serious problem. Black workers were kept in a highly subordinated political, social, and economic position, not only under slavery but also under the subsequent caste system (Genovese 1971).”

Southern Schools“Southern and border states had radically lower rates of enrollment and expenditures and shorter school terms. On the eve of the Civil War, the South provided only 10.6 days of public school per white child as compared with 63.5 in New England and 49.9 in the north central States. Only slowly did the South begin to catch up with the North in the 20th century.”

The Critical Role of Farming“One critical factor to understand in this whole process is the role of the American farmer, an important carrier of capitalistic culture, involved in rational calculations in a world market, and eager to maintain free action in a free society.”

Education as Freedom“A political economy or moral polity based upon free individuals - freed both from traditional forms of community and from an old-world statism - requires great effort and constant vigilance: to educate these individuals (freedom from ignorance), to reform their souls (freedom from sin), to save them from political subordination (freedom from aristocracy), and to save them from sloth (freedom from old-world customs).”

Associations & Institutions“The major educational agents of this individualistic political culture of capitalism-rational and universalistic in premises but almost stateless in structure-were actors whose authority was more moral than official. They combined in associations that look to 20th-century eyes like social move- ments-religious and other voluntary groups rather than organizations clothed with the authority of a bureaucratic state.”

Creating the Common School

“[I]n this conception of the polity the ‘nation’ is really a state of mind more than a powerful apparatus. Thus, it was natural for religious leaders and missionaries, local booster elites, frontier politicians, and other scattered groups to join in a common social movement to create the common school….”

Horace Mann

Coalition of Groups“What held such individuals together, in this 19th-century conception of the polity, was not the coercive or normative power of the state but their common consciousness of the laws of God and the demands of rational human order. These groups acted not simply to protect the status of their own children but to build a millennial society for all children. Their modes of thought and action were at once political, economic, and religious.”

Ethnocentric yet Inclusive

“That these school promoters were often in fact ethnocentric and served their own religious, political, and economic interests is quite clear; but they were doing so in a very broad way by constructing an enlarged national society.”

Source: Primary/Sec. Education

“Public Education as Nation-Building in America: Enrollments and Bureaucratization in the American States, 1870-1930.” John W. Meyer, David Tyack, Joane Nagel and Audri Gordon. American Journal of Sociology, Vol. 85, No. 3 (Nov., 1979), pp. 591-613. University of Chicago Press http://www.jstor.org/stable/2778585

Land Grant Colleges“One of the biggest shifts was the federal government becoming directly involved in higher education, which developed during the Civil War when southern congressmen who opposed the legislation were absent. The Morrill Act of 1862 set in motion an elaborate program whereby states received profits from the sale of an allotted portion of western lands if used to establish programs of agricultural, mechanical, and military sciences, along with liberal arts.” 

Agriculture Experiment Stations

“A key component of the land-grant system is the agricultural experiment station program created by the Hatch Act of 1887. The Hatch Act authorized direct payment of federal grant funds to each state to establish an agricultural experiment station in connection with the land-grant institution there.”

Cooperative Extension Service

“To disseminate information gleaned from the experiment stations’ research, the Smith-Lever Act of 1914 created a Cooperative Extension Service associated with each land-grant institution.”

Rationale

“WHY: Passage of the First Morrill Act (1862) reflected a growing demand for agricultural and technical education in the United States. [H]igher education was still widely unavailable to many agricultural and industrial workers. The Morrill Act was intended to provide a broad segment of the population with a practical education that had direct relevance to their daily lives.”

Embraced in Midwest“Upon passage of the federal land-grant law in 1862, Iowa was the first state legislature to accept the provisions of the Morrill Act, on September 11, 1862.  Iowa subsequently designated the State Agricultural College (now  Iowa State University) as the land grant college on March 29, 1864. The first land-grant institution actually created under the Act was  Kansas State University, which was established on February 16, 1863, and opened on September 2, 1863.”

Other Midwest SchoolsThe University of MO System

Michigan State University

University of Wisconsin-Madison

University of Minnesota

The Ohio State University

University of Nebraska System

University of Illinois (Urbana)

Purdue

New States Enter Union24. Missouri Aug. 10, 1821 1735

25. Arkansas June 15, 1836 1686

26. Michigan Jan. 26, 1837 1668

27. Florida Mar. 3, 1845 1565

28. Texas Dec. 29, 1845 1682

29. Iowa Dec. 28, 1846 1788

30. Wisconsin May 29, 1848 1766

31. California Sept. 9, 1850 1769

32. Minnesota May 11, 1858 1805

33. Oregon Feb. 14, 1859 1811

34. Kansas Jan. 29, 1861 1727

35. West Virginia June 20, 1863 1727

36. Nevada Oct. 31, 1864 1849

37. Nebraska Mar. 1, 1867 1823

38. Colorado Aug. 1, 1876 1858

39. North Dakota Nov. 2, 1889 1812

40. South Dakota Nov. 2, 1889 1859

41. Montana Nov. 8, 1889 1809

42. Washington Nov. 11, 1889 1811

43. Idaho July 3, 1890 1842

44. Wyoming July 10, 1890 1834

45. Utah Jan. 4, 1896 1847

46. Oklahoma Nov. 16, 1907 1889

47. New Mexico Jan. 6, 1912 1610

48. Arizona Feb. 14, 1912 1776

49. Alaska Jan. 3, 1959 1784

50. Hawaii Aug. 21, 1959 1820

Demographics

“Municipalities” > 3,000 residents

1910: U.S.: 35.7 M (Munic) 56.2 M (Non)

MO: 1.2 M (Munic) 2 M (Non)

KS: 0.34 M (Munic) 1.35 M (Non)

KCMO: 0.248 M

St. Louis: 0.688 M

KCKS: 0.082 M

Wichita: 0.052 M

U.S. Population (Millions)1860 31.4

1870 38.6

1880 50.2

1890 63.0

1900 76.2

1910 92.2

1920 106.0

U.S. & W. Europe Compared 1820 1870 1913 1950

U.S. GDP ($M) 12.5 98.4 517 1456

U.S. Pop. (M) 9.6 38.6 97.2 151

W. Europe GDP 160 367 902 1396

W. Europe Pop. 133 188 261 305

UK GDP 36.2 100 225 348

UK Pop. 21 31.6 45.4 50.2

France GDP 35.5 72.1 144 220

France Pop. 30.3 36.9 39.5 41.8

Telephone: 1870s-1910s

1876:  Alexander Graham Bell invents it1881:  First telephone Yellow Pages 1887:  First coin-operated telephone1891:  First dial phone; 512,000 U.S. phones1915:  First "official" coast-to-coast call from Alexander Graham Bell in New York City to Thomas Watson in San Francisco

Victorian Invention Timeline

UK Finance DominanceSterling = world currency

UK invested 40% of trade surplus abroad in 19th Century

1914: 1/3 of UK wealth invested abroad, primarily in U.S. & Latin America: Brits held >50% of world’s foreign investments

1900s: UK running trade deficits

UK dominated high tech

Germany & U.S. RivalsUK share of world trade falling

US had long exported primarily food & commodities, but moved to trade surplus in 1896

By eve of WW I U.S. had little debt in foreign currencies & about to become a net creditor

1913: 1st time U.S.’ largest export was finished goods

Rivals Gained on UK: 1913

Share of international trade:

UK: 15%, Germany: 13%, U.S. 11%

U.S. trade growing the most with Latin America and Asia

Wilson cut U.S. tariffs to spur trade

1913: Transformation“In the mid-1890s, America’s exports of manufactures surged. Manufactured goods jumped from 20 percent of U.S. exports in 1890 to 35 percent by 1900 and nearly 50 percent by 1913. The US suddenly and rapidly shifted from being a large net importer to a net exporter of manufactured goods between 1890 and 1913. In just two decades, the US reversed a century-old trade pattern based on its specialization in agricultural products.”

Natural Resources?

“Lipsey’s (1963, p. 59) observ[ed] that ‘the composition of manufactured exports has been changing ceaselessly since 1879 in a fairly consistent direction — away from products of animal or vegetable origin and toward those of mineral origin.’”

American Commercial Invasion“The explosion of U.S. manufactured exports in the mid-1890s, dubbed by European observers as the “American Commercial Invasion,” followed several decades in which U.S. trade had been relatively stagnant and its commodity composition relatively stable. The volume of U.S. exports crept up only 30 percent in the fifteen years between 1880 and 1895.”

Cotton & Foodstuffs

“Exports continued to be dominated by raw cotton and agricultural products, particularly meat and dairy products and grains, while manufactured goods comprised a consistent 20 percent

of total exports.”

The Surge“The value of manufactured exports rose from $205 million in 1895 to $485 million in 1900, increasing its share of total exports from 25.8% to 35.3%. The volume of manufactured exports rose an astonishing 90 percent. Between 1908 and 1913, manufactured exports surged again, rising in volume by 77% in those five years and bringing the manufactured share of total exports to nearly 50%.”

U.S. v UK Productivity“In the 1880s, a decade in which there was essentially no change in the commodity composition of U.S. trade, capital per worker in U.S. manufacturing rose rapidly compared to the United Kingdom. During the 1890s, a period in which U.S. exports of manufactures expanded rapidly, growth in capital per worker in U.S. manufacturing increased relative to Britain but at a much slower pace.”

Notable US Recessions (NBER)

October 1873 – March 1879: longest U.S. Recession. Peak-to-trough GDP loss 65%

March 1882 – May 1885: GDP drops 38%

Between April 1865 (Appomattox) and December 1914 (WWI) there were 49 years and 8 months (a total of 596 months). The economy was in recession in 372 of these months – 62% of the time.

Frequent & Severe Recessions

The longest continuous period of expansion in this period was January 1871 – September 1873: 32 months. The longest continuous recession was October 1873 – March 1879: 66 months, over twice as long as the longest continuous expansion.

Federal Reserve Created

1913: President Wilson

Regional Fed banks to provide liquidity – Agriculture (only MO has two Fed banks)

Genesis was the banking panic of 1907

As JPMorgan tells the story:

https://www.jpmorgan.com/pages/jpmorgan/about/history/month/oct

It takes a “hero”

“In October 1907, J.  Pierpont Morgan summoned New York City’s major financiers to his library on East 36th Street to find a way to restore liquidity to desperate markets.

The situation was grim. Markets had been wildly unsettled for months and in March, despite record corporate earnings, the American stock market crashed.”

Global Crisis“Prices crumbled, brokerage houses closed, interest rates soared. There were runs on U.S. banks with no central bank to intervene since the Federal Reserve System was not yet formed.

The crisis was global. The Bank of England sent $3  million in gold to Alexandria to stop the Egyptian Stock Exchange’s slide, only to find itself short of cash.”

Systemic Crisis

“Banks throughout Japan failed. French investors sold American stocks to buy gold to send home, badly depleting U.S. reserves.

“[Morgan] also persuaded the team of financiers to supply liquidity to the markets, including underwriting $30 million worth of New York City bonds to keep the city from defaulting.”

And on the seventh day…

“With no central bank, J.P.  Morgan & Co. was the only institution with the experience and authority to act. J.  Pierpont Morgan helped to save several trust companies and a leading brokerage house from insolvency, bailed out New York City and rescued the New York Stock Exchange.”

Reality

Morgan accomplished these things with federal money – but private control of which of his rivals would fail or be saved

Absent the federal funds Morgan would have failed (more likely, he wouldn’t have tried) to “save” Wall Street and NYC

20 Top Metro Areas“For 80 years, from 1860 to 1930 inclusive, New Orleans was the only southern city in the top 20. Cincinnati was the first major city of the Midwest, making the top 20 list in 1820. By 1890 there were 9 midwestern cities in the top 20. In 1850, 5 of the top 20 cities were in New York State: New York City (1), Albany (7), Buffalo (10), Rochester (16), and Syracuse (18).”

http://www.peakbagger.com/pbgeog/histmetropop.aspx

Shrinking Metro Areas

Metro Area High Rank Year High Rank

Louisville 1840 12

Rochester 1840 13

Buffalo 1850 10

Cincinnati 1860 5

St. Louis 1870 4

Minneapolis 1890 9

Pittsburgh 1910 6

Cleveland 1920 7

Detroit 1930 4

Milwaukee 1930 14

Chicago 1950 2

Life Expectancy Surges“The steepest increase in life expectancy occurred from the late 1800s to the mid-1900s.

Until the early 20th century, the most common age of death was in infancy.

In 1854, John Snow traced a cholera outbreak in London to a water pump next to a leaky sewer, and some of the big public works projects of the late 1900s involved separating clean water from dirty.”

WaterClean water may be the biggest lifesaver in history. Some historians attribute one-half of the overall reduction in mortality, two-thirds of the reduction in child mortality, and three-fourths of the reduction in infant mortality to clean water.

http://www.slate.com/articles/health_and_science/science_of_longevity/2013/09/life_expectancy_history_public_health_and_medical_advances_that_lead_to.html

Soap: GermsAmericans began to wash with soap

Increased wealth led to improved housing and reduced tuberculosis: the biggest killer in the cities

Rural US life expectancy was 10 years > city

Average height of Americans fell, rural taller

Nutrition

“Diseases of malnutrition were common among the urban poor: scurvy (vitamin C deficiency), rickets (vitamin D deficiency), and pellagra (a niacin deficiency). Improved nutrition at the end of the 1800s made people taller, healthier, and longer lived; fortified foods reduced the incidence of vitamin-deficiency disorders.”

Contamination

“Refrigeration, public health drives for pure and pasteurized milk, and an understanding of germ theory helped people keep their food safe. The Pure Food and Drug Act of 1906 made it a crime to sell adulterated food, introduced labeling laws, and led to government meat inspection and the creation of the Food and Drug Administration.” 

U.S. Life ExpectancyLife expectancy in the USA, 1900-98

men and women

Year M F1900 46.3 48.31901 47.6 50.61902 49.8 53.41903 49.1 52.01904 46.2 49.11905 47.3 50.21906 46.9 50.81907 45.6 49.91908 49.5 52.81909 50.5 53.81910 48.4 51.81911 50.9 54.41912 51.5 55.91913 50.3 55.01914 52.0 56.81915 52.5 56.81916 49.6 54.31917 48.4 54.01918 36.6 42.21919 53.5 56.0

Erie CanalOpened in 1825; reduced freight cost from $100/ton to $10/ton. Improved canal reduced cost to $3/ton: 97% reduction.

Turn NYC into an Atlantic port that also served the Great Lakes.

U.S. soon had lowest freight costs in the world. Grains were high weight relatively low profit: canal made them profitable.

Dominated NY freight even in 1880.

GeographyHudson River: navigable to NYC

Mohawk Valley & Mohawk River – a route through the Appalachian Mountains

Linked 1st to Lake Erie rather than Lake Ontario – navigable to Great Lakes

Navigable to Lake Superior w/ Soo locks

St. Lawrence Seaway only opened in 1959: Welland Canal locks: 139.5 ft (Ontario/Erie) (v. 85 feet for total Panama Canal).

Soo Locks: Link Lake Superior

By 1890, freight volumes exceeded Suez

By 1895, freight volumes 2X Suez canal

60% of those goods could not have been moved profitably via railroad

From 1870-1898 U.S. railroad freight costs fell by two-thirds

1870-1890: population of Buffalo, Chicago, Cleveland & Detroit grew >200%

Linking Lake Superior

A Rapid Response to Rapids“The St. Mary’s River is the only water connection between Lake Superior and the other Great Lakes. Near the upper end of the river the water drops 21 feet over hard sandstone in a short ¾ mile long stretch. This rapids, or “sault” to use the original old French term, made it impossible for trade vessels to pass.”

http://www.lre.usace.army.mil/Missions/Recreation/SooLocksVisitorCenter/SooLocksHistory.aspx

The Michigan Locks• State Lock 1855 – 1888“Built by the State of Michigan on the south

shore of the river, this project was financed by a congressional land grant of 750,000 acres of public land to the company that successfully built the lock to the required specifications and within the two year deadline.” By contrast, the Suez canal, which required no locks, opened in 1869 after 10 years of construction (cholera delay)

Panama CanalCompleted in 1914. Reduced voyage from U.S. Eastern Seaboard to California by 8,000 miles (and avoided Cape Horn)

“The waters around the cape are particularly hazardous, owing to strong winds, large waves, strong currents and icebergs. These dangers have made Cape Horn notorious as a sailors' graveyard.”

The French failed twice to create the Panama Canal: >25,000 workers died

Detroit Emerges EarlyBy 1890, 40M tons of freight passed Detroit annually

Port of NY estimated to have 70M tons of freight annually (and those figure overlap.)

Source: The Erie Canal and Transportation

Riverine & Lake Commerce

WATERBORNE COMMERCE OF THE UNITED STATES-SUMMARY OF CARGO TONNAGE: 1924 TO 1945

By 1924, canal, river, and Great Lakes commerce carried about 80% of total waterborne U.S. commerce: roughly 300 million tons of cargo

Railroad Everywhere: 1900“Railroads were one of the nation’s largest businesses. They employed nearly 10 percent of all industrial workers.”

http://amhistory.si.edu/onthemove/themes/story_48_1.html

“May 10, 1869 the Union and Central Pacific Railroads joined their rails at Promontory Summit, Utah Territory” – the Golden Spike.

Huge Investments

By 1913, U.S. railroads had: •2.3M freight cars•250,000 miles of track•95,000 locomotives

Transported 1 billion tons

http://www2.census.gov/prod2/statcomp/documents/HistoricalStatisticsoftheUnitedStates1789-1945.pdf

Refrigerated Trains

“Cattle dealer Gustavus Swift had problems delivering his live merchandise to Eastern butchers. So he took an enormous risk, deciding he'd slaughter the cattle in Chicago and ship only the edible parts, chilled.

Refrigeration technology was primitive, but in 1878 Swift commissioned engineer Andrew Chase to design a refrigerated railroad car [that used refillable ice bins].”

Unrevolutionary Plows

“The farmers of George Washington's day had no better tools than had the farmers of  Julius Caesar's day; in fact, early Roman plows were superior to those in general use in America eighteen centuries later.”

http://inventors.about.com/od/pstartinventions/a/plow.htm

Improving the Plow

“The first real inventor of a practical plow was Charles Newbold, of Burlington County, New Jersey, who received a patent for a cast-iron plow on June, 1797. However, early American farmers mistrusted the plow. They said it ‘poisoned the soil’ and fostered the growth of weeds.”

John Deere: Steel“In 1837,  John Deere  developed and marketed the world's first self-polishing cast steel plow. The large plows made for cutting the tough American prairie ground were called ‘grasshopper plows.’ Fifty horsepower engines could pull sixteen plows, and harrows, and a grain drill, performing the three operations of plowing, harrowing, and planting at the same time and covering fifty acres or more in a day.”

Ag Tech Timeline: 1830s1830 -  About 250-300 labor-hours required to produce 100 bushels (5 acres) of wheat with walking plow, brush harrow, hand broadcast of seed, sickle, and flail1834 -  McCormick  reaper  patented1834 -  John Lane began to manufacture plows faced with steel saw blades 1837 -  John Deere and Leonard Andrus began manufacturing  steel plows1837 -  Practical threshing machine patented

1840s: Ag Innovations

1841 -  Practical grain drill patented1842 -  First  grain elevator, Buffalo, NY1844 -  Practical mowing machine patented1847 -  Irrigation begun in Utah1849 -  Mixed chemical fertilizers sold commercially

Ag Innovations: 1850s1850 -  About 75-90 labor-hours required to produce 100 bushels of corn (2-1/2 acres) with walking plow, harrow, and hand planting1850-70 -   Expanded market demand for agricultural products brought adoption of improved technology and resulting increases in farm production1854 -  Self-governing windmill perfected1856 -  2-horse straddle-row cultivator

patented

Ag Innovations: 1860

1862-75 -   Change from hand power to horses characterized the first American agricultural revolution1865-75 -   Gang plows and sulky plows came into use1868 -  Steam  tractors  were tried out1869 -  Spring-tooth harrow or seedbed preparation appeared

Ag Innovations: 1870s

Silos come into use

1870's -   Deep-well drilling first widely used1874 -  Glidden  barbed wire  patented1874 -  Availability of barbed wire allowed fencing of rangeland, ending era of unrestricted, open-range grazing

Ag Productivity: 1890s1890 -  35-40 labor-hours required to produce 100 bushels (2-1/2 acres) of corn with 2-bottom gang plow, disk and peg-tooth harrow, and 2-row planter1890 -  40-50 labor-hours required to produce 100 bushels (5 acres) of wheat with gang plow, seeder, harrow, binder, thresher, wagons, and horses

Ag Productivity: 1930s1930 -  One farmer supplied 9.8 persons in the United States and abroad1930 -  15-20 labor-hours required to produce 100 bushels (2-1/2 acres) of corn with 2-bottom gang plow, 7-foot tandem disk, 4-section harrow, and 2-row planters, cultivators, and pickers1930 -  15-20 labor-hours required to produce 100 bushels (5 acres) of wheat with 3-bottom gang plow, tractor, 10-foot tandem disk, harrow, 12-foot combine, and trucks

Agricultural Productivity

“Total labor used in U.S. farmwork declined from a high of 24.1 billion hours in 1918 to only 4.7 billion hours in 1977. Fertilizer use increased from 890,000 tons in 1918 to 22.1 million tons in 1977, while tractor numbers increased from 85,000 to 4.4 million….”

http://www.kansascityfed.com/PUBLICAT/ECONREV/econrevarchive/1979/3-4q79dunc.pdf

Draft Animals

“Horsedrawn reapers, grain drills, corn shellers, and cultivators came into general use between the Civil War and the turn of the century. During the same period, public policy actively supported the generation of new farming knowledge and its distribution to farmers.”

Mechanized Farming

“The mechanical power revolution got underway during World War I with the wider acceptance of gasoline-powered tractors by farmers. But it was not until the country began to climb out of the Great Depression that farm economics became favorable for a widespread surge in mechanization that lasted into the 1950s.”

Ag Productivity Gains

“  Before the Civil War it took 61 hours of labor to produce an acre of wheat. By 1900, it took 3 hours, 9 minutes.”

Source: Howard Zinn

Federal Ag Programs

Public investments in agricultural research: studies find 20-60% returns

Public extension services funding: studies find 20-100% returns

Expenditures on both have been flat since 1970

http://www.ers.usda.gov/media/921552/aib740_002.pdf

German InventionYou will recognize still famous names

The Industrial Revolution in America:

Automobiles (Hillstrom & Hillstrom 2006)

1885: Karl & Bertha Benz & Gottlieb Daimler

(Benz’ designer’s daughter: Mercedes).

Benz’ patents: speed regulation, spark ignition powered by battery, spark plug, carburetor, clutch, gear shift, and water radiator. Car was based on bike design.

U.S. Auto Industry in 1900http://web.bryant.edu/~ehu/h364/materials/cars/cars%20_10.htm

“40% were steam powered; 38% were electric; and just 22% were powered by gasoline in an internal combustion engine.”

In 1906, a Stanley Steamer set the land speed record of 127 mph.

Olds“Ransom Olds opened the first automobile factory in Detroit. During the first year of operations (1901), the company produced 425 cars. The 3-h.p., curved-dash Oldsmobile thus became the first real success among commercially sold U.S. automobiles. Ransom E. Olds became the first automobile manufacturer to gear up for genuine volume production.”

Design: “Modern”

Model T began in 1909; perceived as modern “motorcar” v Olds “surrey”

GM redefined “modern” in 1927

Henry FordFired as Chief Engineer of the Detroit Automobile Co. when it failed in 1901. It produced five cars in two years!

Ford became a successful car racer

Creditors put him in charge of “Henry Ford Co,” but left to form Ford Motor in ’03 w/ $28,000 initial cap. & $100K par stock.

1902: >50 new auto manufacturers started

1904: U.S. > France; world’s largest mfg’r

Ford: Bigger than Life

‘04: Ford drove Model B: record 91 mph

Initial key to his success was getting his partners – the Dodge brothers – to provide their engines

Fought 7 year patents battle – perceived as beating the powerful

Took on the Dodges to get full ownership

Autos: From luxury to norm“In 1900, Americans owned 8 thousand cars, in 1920, 8 million.” [Zinn]

In 1910 they owned 0.48M cars

By 1920 they owned 1.1M trucks

www2.census.gov/prod2/statcomp/documents/HistoricalStatisticsoftheUnitedStates1789-1945.pdf

Ford & US Domination1912: “Just 4 years after its introduction, the Model T accounted for 3/4 of all cars on America's roads.” By 1914: “The introduction of the moving assembly line at Ford allowed the company to push production past 500,000 units, while dropping the price of a Model T to $440, and raising workers wages to $5 per day--twice the standard industrial wage in America.”

Ford Workers: Middle Class?“In terms of purchasing power, the Ford $5 day gave workers a daily wage that was equivalent to the weekly earnings for an industrial worker in Britain. Thus, assuming a 6-day work week for unskilled and semi-skilled workers, the Ford assemblers had twice the purchasing power of their American counterparts, 6 times the purchasing power of workers at comparable skill levels in Britain.

WWI Cements Dominance

1916: US auto production > 1M (> 50% Model T).

1917: “Registrations of cars and trucks in the U.S. reached 4.8 million. The total for the rest of the world stood at 720,000.”

The car and truck were overwhelmingly American and we were racing away from our rivals mired in a ruinous war.

African-American Migration“By the end of World War II, the character of the black population had shifted: the majority was urban. In 1970, at the end of the second Great Migration, African Americans were a more urbanized population than whites: more than 80% lived in cities, as compared to 70% for the general population of the United States; and 53% remained in the South, while 40% lived in the Northeast and North Central states and 7% in the West.”

“The Great Migration”

“Between 1910 and 1940, roughly 1.5 million African Americans left the South for Northern cities. Between 1940 and 1950, another 1.5 million African Americans left the South. The migration continued at roughly the same pace over the next twenty years. By 1970, about five million African Americans had made the journey.”

Pushed & Pulled

There was a “massive collapse of Southern agricultural employment. The principal factors contributing to this economic disaster were great declines in the prices of sugar, tobacco, and especially cotton, coupled with the negative effects of federal policies designed to rescue Southern planters (at the expense of the workers).”

King Cotton“With the onset of the worldwide depression, cotton prices fell from 18 cents a pound in 1928 to less than 6 cents a pound in 1931. Despite crashing prices, demand was suppressed further by continued high production that bloated surpluses; in the face of the price collapse, farmers harvested a record crop in 1933.”

“New Immigration” Post-1890“Italian immigrants to the United States from 1890 onward became a part of what is known as “New Immigration,” which is the third and largest wave of immigration from Europe and consisted of Slavs, Jews, and Italians. This “New Immigration” was a major change from the “Old Immigration” which consisted of Germans, Irish, British, and Scandinavians and occurred throughout the 19th century.”

Mass Immigration“Between 1870 and 1920 some 11 million immigrants came to the United States. Two laws passed by Congress in the 1920s set quotas that restricted the numbers of Southern and Eastern Europeans that could enter the country.  The 1924 law also barred the entry of all Asians except for residents of the Philippines.  There were no limits set on immigration from the Western Hemisphere.” http://learn.uakron.edu/beyond/industrialAge.htm

KKK Revival“  In Akron, the Ku Klux Klan formed in 1921.  By the mid 1920s the Klan’s membership had grown to 52,000 members and was the largest Klan chapter in the United States.  The Klan also controlled the Mayor’s office, the Superintendent of Schools, the County Sheriff, the County Prosecutor, the Clerk of Courts, 2 of the 3 County Commissioners, and 4 out of 7 of the seats of the Akron Board of Education.”

KKK Controlled Use of Force

“Influence also extended to the Akron Police Department and the local National Guard.”

KKK: 1920s

4.5M members in 1924; peaked at 5M

70 Lynchings in 1919: no convictions

KKK achieved local political power in hundreds of cities

Internal corruption discredited it; not its policies

Birth of a Nation: 1915D.W. Griffith’s classic film glorifying KKK

Based on Thomas Dixon: “The Clansman”

March 21, 1915: Woodrow Wilson attends White House screening of movie. “After seeing the film, an enthusiastic Wilson reportedly remarked: ‘It is like writing history with lightning, and my only regret is that it is all so terribly true.’" 

http://www.pbs.org/wnet/jimcrow/stories_events_birth.html

Film Triumphed in North

“Thomas Dixon reveled in its triumph. ‘The real purpose of my film,’ he confessed gleefully, ‘was to revolutionize Northern audiences that would transform every man into a Southern partisan for life.’“ KKK used film to recruit.

Griffith eventually regretted the hate, and produced “Intolerance,” but it never rivaled “Birth of a Nation’s” popularity 

Predominately Italian

“Between 1900 and 1915, 3 million Italians immigrated to America, which was the largest nationality of “new immigrants.” These immigrants, mostly artisans and peasants, represented all regions of Italy, but mainly came from the  mezzogiorno, Southern Italy.”

Edward C. Banfield“The Moral Basis of a Backward Society” (1958). Theory: “Amoral familism.”

Based on his several months of research in Basilicata in 1955.

Banfield put the “scientific” seal on the common prejudice against Southern Italians. Mezzogiorno means midday and is applied to Southern Italy because it gets so much sun.

The Disreputable Southerners

“Between 1876 and 1930, out of the 5 million immigrants who came to the United States, 4/5 were from the South, representing such regions as CalabriaCalabria, Campania, AbruzziAbruzzi, Molise, and Sicily. The majority (2/3 of the immigrant population) were farm laborers or laborers, or contadini.”

1913: Record High“1913 was the year where a record high of Italian citizens immigrated to the United States. Most of these emigrants came from Northern Italy, but more came per capita from the South. Due to the large numbers of Italian immigrants, Italians became a vital component of the organized labor supply in America.”

Italian Factory & Mine Workers

“They comprised a large segment of the following three labor forces: mining, textiles, and clothing manufacturing. In fact, Italians were the largest immigrant population to work in the mines. In 1910, 20,000 Italians were employed in mills in Massachusetts and Rhode Island.”

https://www.mtholyoke.edu/~molna22a/classweb/politics/Italianhistory.html

Repatriation & Status

1900-1920: “About 50% of Italians repatriated” from the U.S. to Italy. “Many Italians wanted to acquire land in Italy. Therefore, they moved to America to work and earn money, then repatriated.”

“It was not until the 1920s that Italians became more integrated into the American working class.”  

U.S. Pay Far > Italy

“Agricultural workers who farmed year-round would receive a meager 16-30 cents per day in Italy. A carpenter in Italy would receive 30 cents to $1.40 per day, making a 6-day week’s pay $1.80 to $8.40. In America on the other hand, a carpenter who worked a 56-hour week would earn $18.”

         

Italian Ag Crisis“Besides the already unfortunate situation of many Italian farmers, a 19th century agricultural crisis in Italy led to falling grain prices and loss of markets for fruit and wine. Specifically a disease, phylloxera, destroyed grape vines used to produce wine. Therefore, the United States was pictured as a nation with abundant land, high wages, lower taxes, and interestingly enough, no military draft.”

The Rouge Plant“In 1915 Henry Ford bought 2000 acres along the Rouge River west of Detroit, intending to use the site only to make coke, smelt iron, and build tractors.  Over the next dozen years, however, the company turned the Rouge, as it became known, into the most fully integrated car manufacturing facility in the world.”

http://www.nps.gov/nr/travel/detroit/d38.htm

U.S. Industrial Temple

“By 1927, when Ford shifted its final assembly line from Highland Park to the Rouge, the complex included virtually every element needed to produce a car: blast furnaces, an open hearth mill, a steel rolling mill, a glass plant, a huge power plant and, of course, an assembly line.” 

U.S. Scale & Efficiency

“Ninety miles of railroad track and miles more of conveyor belts connected these facilities, and the result was mass production of unparalleled sophistication and self-sufficiency. ‘By the mid-1920's,’ wrote historian David L. Lewis, ‘the Rouge was easily the greatest industrial domain in the world’ and was ‘without parallel in sheer mechanical efficiency.’”

Massive Multiplex

“Located a few miles south of Detroit at the confluence of the Rouge and Detroit Rivers, the original Rouge complex was a mile-and-a-half wide and more than a mile long. The multiplex of 93 buildings totaled 15,767,708 square feet of floor area crisscrossed by 120 miles of conveyors.”

http://www.thehenryford.org/rouge/historyofrouge.aspx

A City of Work

“At its peak in the 1930s, more than 100,000 people worked at the Rouge. To accommodate them required a multi-station fire department, a modern police force, a fully staffed hospital and a maintenance crew 5,000 strong. One new car rolled off the line every 49 seconds. Each day, workers smelted more than 1,500 tons of iron and made 500 tons of glass….”

Integrated Production

“There were ore docks, steel furnaces, coke ovens, rolling mills, glass furnaces and plate-glass rollers. Buildings included a tire-making plant, stamping plant, engine casting plant, frame and assembly plant, transmission plant, radiator plant, tool and die plant, and, at one time, even a paper mill.”

Infrastructure

“A massive power plant produced enough electricity to light a city the size of nearby Detroit. The Rouge had its own railroad with 100 miles of track and 16 locomotives. A scheduled bus network and 15 miles of paved roads kept everything and everyone on the move.”

The Ford Empire

“Ford Motor Company owned 700,000 acres of forest, iron mines and limestone quarries in northern Michigan, Minnesota and Wisconsin. Ford mines covered thousands of acres of coal-rich land in Kentucky, West Virginia and Pennsylvania. Ford even purchased and operated a rubber plantation in Brazil.”

The Ford Fleets“To bring all these materials to the Rouge, Ford operated a fleet of ore freighters and an entire regional railroad company.

Ford’s ambition was never completely realized, but no one has ever come so close on such a grand scale. At no time, for example, did Ford have fewer than 6,000 suppliers serving the Rouge.”

WWI: Birds to Eagle (boats)

“Ford had even considered turning the land into a large bird sanctuary. That changed near the end of World War I, when Undersecretary of the Navy Franklin D. Roosevelt engaged Henry Ford to build boats. In 1917, a three-story structure, Building B, was erected on the Rouge site to build Eagle Boats, warships intended to hunt down German submarines.”

Coke Ovens & Blast Furnaces

“The first coke oven battery went into operation in October of 1919, while blast furnaces were added in 1920 and 1922. Iron from the furnaces was transported directly to the foundry where it was poured into molds to make engine blocks, cylinder heads, intake and exhaust manifolds, and other automotive parts.”

The World’s Largest

“The foundry covered 30 acres and was, at its inception, the largest on earth. In 1926 steelmaking furnaces and rolling mills were added. Eventually, the Rouge produced virtually every Model T component, but assembly of the Model T remained at Highland Park.”

Tractors First“The first land vehicles actually assembled in the Rouge were not cars but farm tractors. No sooner had Henry Ford achieved low-cost transportation with the Model T than he set his sights on doing the same for the world’s farmers. In 1921 production of the world's first mass-produced tractor, the Fordson, was transferred from the original Dearborn plant to the Rouge.”

Electrical Power

“Ford put a mammoth power plant into operation in 1920 that furnished all the Rouge's electricity and one-third of the Highland Park Plant's needs as well. At times, surplus Rouge power was even sold to Detroit Edison Company.”

Safety Glass

“An innovative glass plant began operation in 1923. Utilizing a continuous process that Ford had helped develop, it produced higher quality glass at lower cost. In 1928 the Model A became the first low-priced car to use laminated safety glass. By 1930 the Ford was making its own safety glass at the Rouge.”

“Ore to Assembly”

“The Rouge achieved the distinction of automotive ‘ore to assembly’ in 1927 with the long-awaited introduction of the Model A. Building B would be the home of assembly operations from that time forth.”

WWII: Arsenal of Democracy

“The Rouge settled with UAW representation before World War II broke out. During the war the giant complex produced jeeps, amphibious vehicles, parts for tanks and tank engines, and aircraft engines used in fighter planes and medium bombers.”

Battle of the Overpass“Ford’s obsession with ever-increasing cost reductions through methodical efficiency studies made life difficult for workers. On May 26, 1937, when a group of union organizers led by Walter Reuther attempted to distribute union literature at the Rouge, Ford security and a gang of hired thugs beat them severely. It would be known as the  Battle of the Overpass  and became a pivotal event for the United Auto Workers.”

Gray but with Green TintThe Rouge complex included “a soybean conversion plant turned soybeans into plastic auto parts.”

“Like [George Washington] Carver, Ford was deeply interested in the regenerative properties of soil and the potential of alternative crops such as peanuts and soybeans to produce plastics, paint, fuel and other products.”

Ethanol & Plastic Car Bodies

“Ford had long believed that the world would eventually need a substitute for gasoline, and supported the production of ethanol (or grain alcohol) as an alternative fuel. In 1942, he would showcase a car with a lightweight plastic body made from soybeans.”

http://www.history.com/this-day-in-history/george-washington-carver-begins-experimental-project-with-henry-ford

Anti-Semite, but…“Ford and Carver began corresponding via letter in 1934, and their mutual admiration deepened after Carver made a visit to Michigan in 1937. As Douglas Brinkley writes in "Wheels for the World," his history of Ford, the automaker donated generously to the Tuskegee Institute, helping finance Carver's experiments, and Carver in turn spent a period of time helping to oversee crops at the Ford plantation in Ways, Georgia.”

Carver: Began as a MO. SlaveBorn into slavery in Diamond, MO: 1864?

Kidnapped by Ark. raiders and sold

Recovered by slaveholder, who after the War provided for and educated George and his brother because no local school would educate blacks, eventually got degree: Minneapolis High School (KS). Highland College (KS) rescinded admission when it learned his race. First, black student at Iowa State (BS & MS).

Highland College

First university in Kansas

Original name: Highland University

Currently: Highland Community College

Up near KS, Nebraska, MO borders

Carver would have been, by far, their most famous graduate

1904: Cadillac & Buick

Cadillac formed out of the bankruptcy organization of Detroit Automobile Corp.

William C. Durant (Flint) buys the bankrupt Buick in 1904. By 1908, Buick was the largest producer of autos in the world. Durant puts together Buick, Olds & Cadillac to form “General Motors.”

Ford first sells the Model T in 1908.

Kansas City & the Auto: 1909

“In Kansas City, entrepreneur George Pepperdine opened the Western Auto Supply Co. as a mail order house supply parts for the Model T. Business was good because the Model T was sold without tires, fenders, a top, a windshield, or lights. A buyer of the Model T could spend as much on such aftermarket accessories as the car itself cost.”

The Model T Conquers: 1909

“Ford's success with the T (sales nearly doubled from the 10,000 sold in the first year of production) caused him to stop production of higher priced models in order to concentrate on the T.

http://web.bryant.edu/~ehu/h364/materials/cars/cars%20_10.htm

Runners & the Unmoving Chassis“In case you're wondering how Ford workers could assemble 26,000 cars a month before the introduction of the assembly line, this is how they did it: The frames were set on sawhorses in a line down the middle of the plant. Parts runners delivered parts to each chassis. Assembly teams moved down the line of chassis performing just one assembly operation.”

Ford Championed Innovation

“From 1910, when Henry Ford opened the 60-acre Highland Park plant, the company had a policy of replacing machines producing parts as quickly as the tool room could develop those specialized, single purpose machines that so greatly improved the production rates for parts. The Ford tool room was a major center for innovation in machining and tooling.”

Ford’s Tool Center“They built the machines that made the plant go. The new specialized machines for producing parts were positioned strategically according to 'what' they produced in order to produce parts as close to the assembly area as possible. By 1914, the tool room had built and installed 15,000 of its special purpose machines. They were installed in a line parallel to the chassis assembly area.”

Scientific ManagementLed to moving assembly line (in stages) that by 1914 reduced the time to assemble a vehicle to 90 minutes. By 1920:

“Annual U.S. production of automobiles stood at nearly 2.3 million. France, the world's second largest producer of automobiles, produced 40,000 units. The world total production stood at just under 2.4 million.” Became known as “Fordism”“Fordism”

$5/day Wage & 8 Hour WorkdayTo combat high turnover, Ford introduced the 8 hour (v. normal 10 hour) workday and doubled the daily wage to $5 in 1914.

“A number of business leaders excoriated Ford for the move….” but it was widely praised (Hillstrom & Hillstrom). Ford claimed it increased worker efficiency by increasing retention. Some critics said it was to fend off IWW unionization effort.

Early 1920s: Ford Dominates GM

1921: “Ford held just over 61% of the U.S. market for automobiles. GM's market share stood at just 12%.”

1923: “U.S. auto production passed 3.7 million units. The Ford Model T accounted for just under 52% of cars produced in the U.S. There were 13 million cars on American roads.”

The Model T’s Zenith1924: “For the second year in a row, Ford production of Model T's approached the 2 million mark. The price dropped to $290. Over half the cars in the world were Ford Model T's.”

1925: “The price of a Ford Model T Roadster dropped to $260. Ford had 10,000 U.S. dealers selling the Model T.”

1926: US auto production reaches 4M

Transforms Consumer Finance

“Unheard of just a decade earlier, credit sales of automobiles had become the industry standard. Installment purchases accounted for more than 2/3 of all new car sales. With the automobile leading the way, credit purchases of expensive consumer goods (e.g., home appliances) was becoming a way of life for Americans.”

The T-Era Ends

1927: with > 15M total sales

Consumers view the T as outmoded

100,000 workers lost their jobs

GM embraces style: annual (cosmetic) model changes, colors & devalues technical innovations. But GM (Sloan) also developed modern decentralized management to run world’s largest firm.

1935 Chevrolet

Tin Lizzie

Our biggest industry

“As the Model T was withdrawn from production, automobiles sales had made the industry the leading American industrial sector in value of product. Automobiles ranked 3rd on the list for value of product exported. There was one registered automobile for every 4.5 Americans, and 55% of American families owned a car.”

Coal“In 1860, 14 million tons of coal were mined; by 1884 it was 100 million tons.”

Source: Howard Zinn

Quadrillion = 1000 billion BTU = energy required to raise 1 pound of water 1ºF

1885: 1st time energy from coal > trees

1920: Energy from coal 6X from petroleum

http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb1601

U.S. (Quadrillion BTUs) Coal Hydro

1860 0.518

1865 0.632

1870 1.048

1880 2.054

1890 4.062 0.022

1900 6.841 0.250

1910 12.714 0.539

1920 15.504 0.738

Coal & Pittsburgh“As demand for iron surged from 1840–1870, larger tracts of forest land were required to provide charcoal, and deforestation became a problem. Charcoal was first replaced by anthracite (hard coal) from Northeastern Pennsylvania, but by 1875 bituminous (soft) coal in the form of coke from Southwestern Pennsylvania  provided over 50 percent of blast furnace fuel.” (Anthracite can produce up to 3X the energy of bituminous.)

Coke

“Coke is prepared when great heat is applied to coal kept out of direct contact with air; it is nearly pure carbon.

Coal was transformed in the Connellsville fields by means of beehive ovens, averaging 7 feet high and 12 feet in diameter. They were cheap to build.” 

Worth More than Silver & Gold“During its period of prime production (1880­ –1935), the Connellsville region shipped 500 million tons of coke, requiring 770 million tons of metallurgical coal. At its peak, 39,000 beehive ovens produced over 20 million tons of coke annually. The direct and indirect wealth produced by this  bounteous gift of nature far exceeded the value of all the gold and silver ever mined  in the U.S.”

Steel v. Iron Iron is highly ductile

Alloying it with (just enough) carbon can produce a far harder material with greater tensile strength and the ability worked in certain ways (e.g., it can be sharpened)Pig iron (> C% than steel) loses malleability and becomes brittle

Cast iron can be cast, but is not malleable even when hot

Bessemer: Making Steel“In addition to its riches in coking coal, three interrelated factors destined Pittsburgh to be the nation’s steel capital: the Bessemer process, the railroads and Andrew Carnegie. The Bessemer steel-making process consisted of air blown through molten iron in a five-to-seven-ton, egg-shaped Bessemer converter. The oxygen in the air decarbonized the iron, converting it to strong, workable steel.”

Mass Produced Steel“The Bessemer process was widely adopted in the U.S. between 1865 and 1875, and it made mass production of steel possible. The iron industry became the steel industry. Bessemer-driven steel production coincided with an insatiable demand from U.S. railroads for steel rails. In 1860, U.S. railroad trackage was a modest 30,000 miles. It doubled by 1870 and increased eight-fold by 1900.”

U.S. Steel

“By 1900, fully integrated in both iron ore and coal, Carnegie Steel was the country’s largest steel company with 3 million tons of capacity. In 1901, J.P. Morgan consolidated the steel industry with Carnegie and seven other major companies into the giant U.S. Steel Company with a capitalization of $1.4  billion—the largest private company in the world.”

Monopoly

“It controlled 60 percent of U.S. steel production, with more than  40 percent coming from the Carnegie  properties. By 1910, Pittsburgh produced 25 million tons of steel; more than 60  percent of the nation’s total.”

Steel

“Before the Bessemer process, iron was hardened into steel at the rate of 3 to 5 tons a day; now the same amount could be processed in 15 minutes.

By 1880 a million tons of steel were being produced; by 1910, 25 million tons.

Source: Howard Zinn

Steel & U.S. Exports

“This paper seeks to understand the rapid growth of U.S. manufactured exports by focusing on the iron and steel industry, which was the driving force behind the dramatic change in the commodity composition of exports. This industry demonstrates the link between the exploitation of natural resources and the expansion of manufactured exports….”

Mesabi, MN: Iron Ore“The initial surge of iron and steel exports during the 1890s can be traced to the opening of the Mesabi iron ore range in Minnesota, which cut the domestic price of iron ore in half during that decade. The lower domestic price of iron ore helped to reduce the relative price of U.S. iron and steel exports significantly and, according to results reported below, was equivalent to more than a decade’s worth of productivity improvements in the industry.”

Location, Location, Location

The Best in the World“The ‘most remarkable deposit of high-grade iron-ore known to-day, its reserves are supposed to be twice as great as those of all the old ranges combined, and the Lake Superior mines led the world even before the Mesabi was discovered.’ Even more remarkable than its enormous size was the ore’s location close to the earth’s surface, which made strip mining a viable and extremely inexpensive extraction technology.”

Iron Prices Plunged

“The Mesabi opening in 1892 had dramatic consequences. Minnesota accounted for just 6% of U.S. iron ore production in 1890, but 24% in 1895 and 51 percent in 1905. The price of iron ore plunged by about 50% when the Mesabi shipments hit the market, from about $5 to $6 per ton in the early 1890s to about $2 to $3 per ton by the mid-1890s.”

Iron Production Surges

“Between 1895 and 1913, U.S. production of iron ore increased from 15,958 tons to

61,980 tons.”

U.S. Iron Cheaper than UK

“Between 1892 and 1898, when overall export prices fell 16 percent, the export price of iron and steel products fell 24 percent. This price reduction significantly improved the cost position of domestic producers vis-a-vis British producers, then the leading exporter of iron and steel products, because British iron and steel export prices rose slightly during this period.”

Monopoly Stalled Export Growth“Andrew Carnegie began purchasing iron ore-producing districts around Lake Superior in 1894 and by 1907 U.S. Steel owned 75% of total ore deposits of Minnesota (U.S. Commissioner of Corporations 1911). ‘the price of Lake Superior ore during the greater part of 1902 to 1906 . . . has been established in large measure by agreement among the principal ore-producing interests.’”

Carnegie: US Steel & Mellon

“By 1901, the iron ore mines, the lake and rail transport system, and the blast furnaces were largely owned and operated by … U.S. Steel.”

Large Copper Exports

“The second largest category of manufactured exports was copper. Exports of copper manufactures rose from 0.3% of exports in 1890 to nearly 6% of exports in 1913 because electrification prompted much greater demand for a host of copper-related manufactured products, particularly copper wire.”

Copper Ore “This growth was facilitated by massive copper extraction in the West, but – as in the case of iron ore – the United States remained a small net importer of raw copper through this period despite its domestic abundance. In 1913, the United States exported $3.0 million of raw copper while importing $13.7 million.”

Top 7 US Exports 1890 1895 1900 1913 $M

Cotton Cotton Grains Cotton 546

Grains Meat Cotton Iron/St 305

Meat Grains Meat Grains 211

Petro. Petro. Iron/St Meat 154

Animals Animals Petro Copper 140

Wood Iron/St Copper Petro 130

Iron/St Tobacco Wood Wood 116

Steel Export Boom“The export boom was not broadly-based across manufacturing industries but concentrated in iron and steel products. Iron and steel was the largest category of manufactured exports. Iron and steel exports jumped from 4.0% of all exports in 1895 to 9.0% in 1900. The volume of iron and steel exports rose by a factor of more than six. The ratio of iron and steel exports to production rose from 4.4% in 1889 to 11.7% in 1899.”

Steel Productivity Grew Rapidly

“Productivity growth was much more rapid in iron and steel than in other manufacturing industries: between 1899 and 1909, total factor productivity increased 2.7% annually in the primary metals industry and 2.3 percent in the fabricated metals industry, compared with just 0.7% in manufacturing overall.”

Electricity

Edison: commercially viable incandescent lights in 1879; tungsten lights (mandated by gov’t) were far more efficient.

“Electrical wire needed copper, of which 30,000 tons were produced in 1880; 500,000 tons by 1910.”

Source: Howard Zinn

1901: Marconi: 1st transatlantic wireless

War of the CurrentsEdison: (GE) Direct Current: Hard to change voltage (Edison dishonest re AC)

Tesla: (Westinghouse) Alternating current: Transformers change voltages

1893: Chicago World Fair. Tesla wins bid

1896: Tesla/Westinghouse power Buffalo using Niagara Falls

http://energy.gov/articles/war-currents-ac-vs-dc-power

U.S. Oil Production