Introduction
The late nineteenth century is considered by many historians as the age of great deflation. Nearly all places around the globe particularly in Europe marked this time as the period of economic turn down. Nevertheless, America had it differently.
During this period the average yearly income growth for the Americans doubled. This increase in was accelerated by the industrial growth especially in the steel industry. This industrial growth created more wealth than any other time in the history of America.
Growth of steel industry
The industrial growth came with popularity of factories that marked the American industrial revolution. Prior to 1877 factories were known only to be producing goods characteristically of the old artisan. The beginning of 1877 saw the turn in industrial productions.
Factories began producing capital good that hugely contributed to the national productive capacity. Steel production was one such capital good productive enterprise. Steel replaced iron which was then considered to be ineffective in the making of rail as well as in industrial usage.
The introduction of steel manufacture was attributed to Henry Bessemer who invented the Bessemer converter. The converter was a large furnace that was designed in such a way that it could easily refine raw pig iron to steel.
This potential was fully exploited by Andrew Carnegie. Carnegie arrived in America from Scotland in 1848 aged twelve. He spent most of his early years as a telegraph operator, working for the Pennsylvania Railroad. Carnegie quickly rose up the managerial ladder and amassed his fortunes during the war speculations.
He first became an iron manufacturer before establishing a huge steel mill near Pittsburgh in 1872. The Carnegie steel mill became the pioneer of any other steel mill in the 1870s through to 1900. The steel mill had a Bessemer converter as the center piece of its production.
This was seen as advancement as the mill run constantly. Besides its technological advancements, raw materials in form of mineral were also abundant. This ensured that the steel mills operated at full capacity. The northern Minnesota iron ore deposits and the Appalachian coal deposits were major sources of raw materials needed by the steel industry.
Railroad
However with discovery of steam engines, huge quantities of coal were to be consumed by railroads and factories. Steam engines were then the major national energy workhorse. In 1880s, the continuous rotating turbines was invented.
These turbines were more efficient than the steam engines and were therefore used to produce electricity. This completed the energy revolution during that time. The energy revolution that led to the production of huge quantities of electricity contributed o the enhanced production of capital good.
This was also the time of railroad boom. Prior to the civil war, America was still reeling under the water travels technologies. There was no feeling for the need to expand beyond the water ways travel.
However when the rail road was first introduced, it immediately became popular. Transportation was made efficient; moreover, people could travel throughout the year. Furthermore, huge bulk of good could now be moved easily in inland places far away from the water ways.
The major problem was the cost of building the railways. Both the state and federal governments considered building the railway to be very costly. Contrary to canals, the rail road building was left in the hand of the private sector or as a free enterprise by the federal government.
However the government still played a huge role in the building of the railway both in terms of policy regulations and financing. In most cases the federal or state governments could buy the rail construction bonds with an aim of funding the building of the railway. Often, the governments could offer grants or the railway construction loans in form of bonds which they could still buy and have a larger stake.
The running and managing the railway system was left on the hands of corporations that were formed by the railway constructors and operators. Besides the administrative role, the corporation has to ensure that the capital was pooled in huge amounts for the construction of the railway.
However, the dilemma of the railway owners was that they only had a limited liability on the amount of money they invested. The new legal entity, the railways corporation, ensured that the private entrepreneurs got the most of their investment in the railway system.
Despite the railway corporation good administrative intentions, the rail road building companies were notoriously corrupt. About half of the railway construction money was pocketed by the promoters of these companies.
Trade unionism
The growth of industries could not have without the rise of workers unions and activism industries were being accused of exploiting workers. Trades unions that fought for the rights of workers sprung up and rapidly spread. However the contribution of industry to the general economy was enormous.
Bibliography
Fernlund, Kevin. Documents to Accompany America’s History, Volume 2: Since 1865. Boston: Bedford/St. Martin’s, 2010.
Henretta, James, and David Brody. America: A Concise History Since 1877. Boston: Bedford/St. Martin’s, 2010.