Possible essay topics
 Strengths and weaknesses of the American economy
 The future of USD as a global currency
 Is the double deficit of the American economy sustainable?
 Future of American economy – prosperity or collapse?
 Lessons from the Great Depression (1929-33)
 The role of entrepreneurship in the economic success of the USA
 American health care reform – is Obamacare successful?
 The role of innovation in the American economy
Ing. Tomáš Dudáš, PhD.
Famous US industrialists in the 19th century
 Cornelius Vanderbilt
 J. P. Morgan
 John D. Rockefeller
 Leland Stanford
 Henry Clay Frick
 John Jacob Astor
 Andrew Carnegie
 James Buchanan Duke
Famous US industrialists in the
th
19 century
 Cornelius Vanderbilt - railroads
 J. P. Morgan – banking, finance, steel industry
 John D. Rockefeller – Standard Oil
 Leland Stanford - railroads
 Henry Clay Frick – steel industry
 John Jacob Astor – fur trade, real estate
 Andrew Carnegie – railroads, steel industry
 James Buchanan Duke - tobacco
Cornelius Vanderbilt
John D. Rockefeller
J.P. Morgan
Andrew Carnegie
The Economic Effects of the Civil War
 Approximately 600 000 people died on both sides –
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9%
of the male population in the age group 15-39
Another 500 000 were wounded
Estimated loss of human capital – 1,8 billion USD on both
sides
Direct government expenditures – 2,3 billion in the North,
1 billion in the South
Destruction of property – 1,5 billion USD (mainly in the
South)
On the other hand – the war was a great source of income
for someone
Railroads and Economic Development
 The construction of railroads continued after the civil
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war
By 1910 the USA had 351 767 miles of track, of which
266 000 were main track
Constructing the American railroads was one of the
biggest efforts in the American history
Three major waves – 1868/73, 1879/83 and 1886/92
The majority of the construction was financed by
borrowed money
Government help – subsidies and land grants
Pacific Railroad (1863-1869)
Agriculture between 1860 and 1910
 Huge expansion of farm output – extensive growth
 No chemical and biological improvements available
 Slow mechanization
Population growth and the Atlantic
migration
 Strong migration – 37 million people came from Europe
between 1840 and 1920
 Sources - 6 million from Germany; 4.5 million from Ireland;
4.75 million from Italy; 4.2 million people from England,
Scotland and Wales; 4.2 million from the Austro-Hungarian
Empire; 2.3 million from Scandinavia; and 3.3 million people
from Russia (mostly Jews, and Poles and Lithuanian
Catholics)
 On the other hand, domestic fertility was decreasing (41,1
births/1000 people in 1860 compared to 29,2 births/1000
people in 1910)
Population growth and the Atlantic
migration
 Other demographic trends
 Continuing rise in the population living in urban areas
 The country continued to spread out geographically
 The percentage of foreign born rose, especially from
Europe
 The nonwhite portion of the population continued to
fall
The rise of the heavy industry
 Industry growth rates between 1860-1910
 Machinery – 690 %
 Lumber – 650 %
 Printing and publishing – 520 %
 Iron and Steel – 310 %
 Men’s clothing – 260 %
 Railroad Cars – 205 %
The rise of the heavy industry
 American manufacturing production surpassed the combined
total of Great Britain, Germany, and France
 Railroads opened new areas to commercial farming, creating a
truly national marketplace and inspiring a boom in coal mining
and steel production
 By 1900, the process of economic concentration had extended
into most branches of industry—a few large corporations, called
"trusts", dominated in steel, oil, sugar, meatpacking, and the
manufacture of agriculture machinery
 Increased mechanization of industry is a major mark of the this
era’s search for cheaper ways to create more product
Innovation
 The United States became a world leader in applied technology.
From 1860 to 1890, 500,000 patents were issued for new
inventions—over ten times the number issued in the previous
seventy years
 George Westinghouse invented air brakes for trains (making
them both safer and faster). Theodore Vail established the
American Telephone & Telegraph Company. Thomas A. Edison
invented a remarkable number of electrical devices, as well as the
integrated power plant capable of lighting multiple buildings
simultaneously
 Oil became an important resource, beginning with the
Pennsylvania oil fields. Kerosene replaced whale oil and candles
for lighting
 Frederick Taylor – innovation in management science
Examples of key inventions in the late 19th
century in the USA
 Alexander Graham Bell
 Telephone
 Thomas Alva Edison
 Light bulb
 Phonograph
 Levi Strauss
 Blue jeans
 Nikola Tesla
 Radio
 Christopher Latham Sholes
 Typewriter
 John Pemberton
 Coca-cola
Economic crises
 Panic of 1873
 Start of the long (or great) depression (until 1879 – 65
months)
 It began with a crash on the Vienna Stock exchange
 Panic of 1893
 It was caused by railroad overbuilding and shaky
railroad financing which set off a series of bank failures
– similar to the tech bubble
 In total over 15,000 companies and 500 banks failed
International economic relations of the USA
 International trade
 The share of USA was growing – 9,1 % in 1890
 Shift from agricultural products to industrial
 Trade with Europe dominated
 From the start of the 20th century the current account of
the BoP recorded surpluses
 Heavy protectionism in the USA
 International capital flow
 During the turn of the centuries USA changed from
international debtor to creditor
Big business and government intervention
 Rise of big business – huge wave of mergers during the
last years of 19th century
 1892 – merger of Edison General Electric and Thomson-
Houston Electric Company to form General Electric
 1901 – merger of Carnegie Steel Company and several
other steel and iron businesses to form the United States
Steel Corporation
 Rise of Standard Oil – one of the first multinational
enterprises
Why did corporations grow?
 Innovation produced economy of scale in the industry
 Declining transportation costs encouraged growth of optimal
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plant sizes
Developing financial services in the capital markets made it
easier for individual firms to achieve economies of scale
Expansion of domestic and international markets made enlarged
plat size profitable
Mergers are used to control markets (instead of cartels)
Other…
Government response
 Growing regulation of big business
 Railways – Interstate Commerce Commission
 Antitrust acts
 The Sherman Act (1890)
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It was the first Federal statute to limit cartels and monopolies,
and today still forms the basis for most antitrust litigation by
the United States federal government
Standard Oil – “unreasonable monopoly” - 1911
Most important Standard Oil successors
 Standard Oil of New Jersey (SONJ) - or Esso (S.O.) – renamed Exxon, now part of ExxonMobil.
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Standard Trust companies Carter Oil, Imperial Oil (Canada), and Standard of Louisiana were
kept as part of Standard Oil of New Jersey after the breakup.
Standard Oil of New York – or Socony, merged with Vacuum – renamed Mobil, now part of
ExxonMobil.
Standard Oil of California – or Socal – renamed Chevron, became ChevronTexaco, but
returned to Chevron.
Standard Oil of Indiana - or Stanolind, renamed Amoco (American Oil Co.) – now part of BP.
Standard's Atlantic and the independent company Richfield merged to form Atlantic Richfield
or ARCO, now part of BP. Atlantic operations were spun off and bought by Sunoco.
Standard Oil of Kentucky – or Kyso was acquired by Standard Oil of California - currently
Chevron.
Continental Oil Company – or Conoco now part of ConocoPhillips.
Standard Oil of Ohio – or Sohio now part of BP.
The Ohio Oil Company – more commonly referred to as "The Ohio", and marketed gasoline
under the Marathon name. The company is now known as Marathon Oil Company, and was
often a rival with the in-state Standard spinoff, Sohio.
Henry Ford – man of a new era
 He was born in 1863 in Michigan in a farming family
 He never liked farm life, so he left to Detroit in 1879 to work as
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an apprentice machinist
He worked for Westinghouse and later for Edison
1896 – experiments with Ford Quadricycle
1899 – Ford founded Detroit Automobile Company
1901 - Henry Ford Company
1902 - Ford & Malcomson, Ltd. later renamed as Ford Motor
Company
1908 – Ford Model T (15 million sold)
1913 – Moving assembly belts