Industrial Revolution

The Industrial Revolution swept across the globe in the 18th and 19th centuries as manufacturing improvements led to a rise in textile and industrial factories, and eventually to the forms of mass production pioneered by Henry Ford. Centered first in Great Britain, followed by the United States and Europe, it forever changed not only industry, but the way people lived, worked and communicated. The steam engine and the rise of railroads allowed goods, and people, to move about the country as never before. New scientific discoveries also abounded, including the harnessing of electricty and the invention of the telephone. The revolution transformed the world into a more modern society, and fueled the rapid growth of the American economy, even as it spurred new social ills and the rise of the labor movement
First Industrial Revolution
The term Industrial Revolution is used to describe profound economic transformations resulting from the introduction of new technologies of production. Although technological innovation has been a continuous process, in the transformation of societies from agricultural, commercial, and rural to industrial and urban, two revolutionary periods stand out.
The First Industrial Revolution began in Great Britain in the last decades of the eighteenth century. It resulted from the rapid adoption of three new technologies--the steam engine, relying on the energy of the fossil fuel, coal; machines for spinning thread and weaving cloth and increasingly driven by steam rather than water power; and furnaces--blast, puddling, and rolling--to make iron ore into finished metal by using coal. The Second Industrial Revolution began about a century later and was centered in the United States and Germany. It resulted from a wave of innovations in the production of metals and other materials, machinery, chemicals, and foodstuffs. The First Industrial Revolution altered the direction and hastened the growth of the American economy. The Second transformed that economy into its modern urban industrial form.
The coming of the First Industrial Revolution in Britain had as significant an impact on American economic life as did the contemporary political revolution that brought the country's independence. The significance of the economic transformation, however, became clear only after more than two decades of warfare between Britain and France ceased in 1815. Then the United States became the major source of cotton for Britain's yarn and the foremost market for Britain's finished yarn and cloth as well as a major market for its iron and hardware industries. The voracious demand of British mills for raw cotton drove the slave plantation westward, and the marketing and shipping of textiles and hardware into the country through New York quickly made that city the nation's largest commercial center.
Finally, the transfer of the new technologies across the Atlantic gave the United States its first industrial factories, large mills that integrated spinning and weaving machinery in a single building. Their output far surpassed that of the small water-powered spinning mills in Rhode Island and southeastern Massachusetts built between 1792 and the War of 1812. The first integrated factory was built in 1814 for the Boston Manufacturing Company by Francis Cabot Lowell who had brought from Britain plans for an improved power loom. Soon capitalized at $600,000, the corporation employed more than three hundred workers, mostly young women recruited from nearby farms. In 1822 Lowell's associates began to build on the Merrimack River an industrial town named for Lowell (who had died in 1817). A number of integrated mills owned by different corporations were soon operating in Lowell, as were similar groups of mills built at other locations on the Merrimack, the Connecticut, and smaller rivers. Then as coal became available in quantity with the opening of canals into the anthracite region of Pennsylvania in the late 1820s, steam-powered integrated mills appeared in Providence, Fall River, New Bedford, and other New England coastal towns.
The availability of coal permitted the use of British techniques of making iron, and the first anthracite coal furnace went into blast in 1840. By 1854, 45 percent of the iron made in the United States was being produced by coal-fired furnaces rather than by charcoal furnaces and water-powered forges. The new supplies of coal and iron permitted American manufacturers to produce their own machine tools and machinery. By the 1850s they were making firearms, sewing machines, and agricultural equipment through the fabrication and assembly of standardized parts--a technique that was soon called the "American system" of manufacturing.
Second Industrial Revolution
By the time of the Civil War the technologies on which the First Industrial Revolution were based were fully rooted in the United States. In the years after the war, the nation's industrial energies were concentrated on completing the railroad and telegraph networks of the North, rebuilding those of the South, and expanding those of the West. Once the harsh depression of the 1870s was over, the stage was set for the Second Industrial Revolution.
That revolution rested on three major developments. Most important was the completion of the nation's modern transportation and communication networks--the railroad, telegraph, steamship, and cable--that made possible the high-volume flow of goods essential for the creation of modern industrial economies. The second was the coming of electricity in the 1880s, which provided a more flexible source of power than steam for industrial machinery, a new means of urban transportation (the trolley and the subway), and brighter, cheaper, and safer illumination in factories, offices, and homes. Electricity also transformed chemical and metallurgical processes. The third development was the beginning of the application of science to industrial processes and to the creation of new and improved consumer and industrial products.
The new industries of the Second Industrial Revolution employed new or greatly improved processes to turn out new or greatly improved products that included steel and other metals, light and heavy machinery, oil, chemicals, and in addition, packaged food, drug, and tobacco products bearing brand names. These industries were capital-intensive--that is, the ratio of capital to labor was much greater than in the older industries such as textiles, apparel, furniture, lumber, and shipbuilding. They were also the first whose technologies of production enjoyed the cost advantages of economies of scale or scope; the larger plants had substantially lower unit costs than smaller ones. Such economies, however, could be achieved only if the works steadily operated at close to full capacity. To exploit fully the cost advantages of scale and scope, entrepreneurs in the new industries had to build plants of optimal size (based on the minimum efficient scale of the technology and the extent of the market) and to create national and international sales and distribution organizations to sell the output. And they had to recruit teams of salaried managers to coordinate and monitor the flow of materials through the processes of production and distribution.
The first entrepreneurs who made such investments in manufacturing, marketing, and management quickly dominated their industries. In oil, John D. Rockefeller and his managers reduced the cost of producing a gallon of kerosene from five cents in the early 1870s to less than half a cent in the mid-1880s. In steel, Andrew Carnegie brought the price down from sixty-seven dollars a ton in 1880 to seventeen dollars at the end of the century. In both cases, as cost (and price) went down and volume went up, profits soared, creating two of the world's largest industrial fortunes. So too the entrepreneurs who introduced the new electrolytic processes in refining and smelting copper and aluminum achieved comparable cost reductions. The Aluminum Company of America reduced the cost of what had once been a precious metal to thirty-five cents a pound.
In light machinery produced by the American system of manufacturing, the first entrepreneurs to create large enterprises in office machinery (Remington in typewriters, Burroughs in adding machines, National Cash Register in its industry, and the forerunners of International Business Machines in time clocks and punch cards), in agricultural machinery (McCormick Harvester and its successor International Harvester), and in sewing machines (Singer) quickly dominated global as well as American markets. In 1913, for example, the two largest commercial enterprises in Imperial Russia were Singer and International Harvester. The pattern was much the same in the new food processing and packaging industries where Borden in canned milk and Heinz and Campbell in canned vegetables and soups achieved positions of comparable dominance, as did the American Tobacco Company in cigarettes.
In electrical equipment the earliest companies in the field in the 1890s, General Electric and Westinghouse, are still global leaders. And in chemicals, Du Pont, Dow, Monsanto, and the enterprises that became Union Carbide and Allied Chemical all dominated their different technologies. In both the chemical and electrical industries the leading companies from the beginning of the century recruited engineers, physicists, and chemists to concentrate on improving their products and processes. During most of the twentieth century close to half of the scientific personnel employed in American manufacturing worked in these two industries.
These capital-intensive and technologically advanced industries became, as Simon Kuznets points out in Economic Growth of Nations, the drivers of economic growth. Before World War II they helped make Germany the most powerful industrial nation in Europe and the United States the largest producer of industrial goods in the world. In the late 1920s the United States accounted for over 40 percent of the world's industrial output. In those industries most central to the growth and transformation of modern economies, the managers of a small number of large enterprises made operating decisions on output, product design, price, and services for a major share of their industry, and also the decisions on investment in facilities and research and development that determined the direction of the industry's future growth and its competitiveness in international markets.
A Modern Revolution
In the interwar years the primary engine for economic growth and transformation was the automobile industry, and after World War II, the computer. The impact of these technologies was so profound that they seemed to contemporaries to be as revolutionary as the industries of the First and Second Industrial Revolutions. But their creation and growth followed a pattern strikingly similar to those that had made up the Second Industrial Revolution. In 1913, a little more than a decade after automobiles began to be sold commercially in the United States, two firms--Ford and General Motors--produced over half the annual output of passenger cars (Ford, 40 percent, and General Motors, 12 percent). In the 1920s Ford was successfully challenged by General Motors and then Chrysler. In 1929 the United States accounted for 85 percent of the world's output of automobiles with the Big Three enjoying the lion's share. And of the 15 percent produced abroad, subsidiaries of Ford and General Motors were responsible for a substantial amount.
The pattern in the postwar computer industry differed only in that many of the creators of that industry were established enterprises, not entrepreneurs like Ford, Rockefeller, or Carnegie. Business machine companies were the pioneers in establishing the industry's earliest product line, the mainframe computer. These included Remington Rand, Burroughs Adding Machine, National Cash Register, and Honeywell. International Business Machines, or ibm, made a massive investment in production, distribution, and management for its System 360 and became and remained the industry's dominant company. By 1980 these firms accounted for over 80 percent of all mainframe production. The entrepreneurial firms that appeared were those whose founders developed new types of computers for new markets and then made the three-pronged investment in production, marketing, and management. But these companies, which included Digital Equipment in minicomputers and Apple in microcomputers, were soon challenged by ibm and other established firms. The products of these relatively few enterprises transformed production, distribution, and management throughout the American economy, much as the motor vehicle and electrical equipment industries had done in earlier years.
Computers, in fact, brought as many changes in the workplace and work force as had the technological innovations of the Second Industrial Revolution. In the older labor-intensive nineteenth-century industries--particularly those that relied on a male work force such as printing, shoe making, cigar making, specialized machinery, and metal making--the workers' skills gave them bargaining power. In the latter part of the century these workers successfully organized local and national unions that bargained with owners and managers on wages, hours, and working conditions.
In the new capital-intensive industries of the Second Industrial Revolution, machines replaced craft skills, and the work force became largely one of semiskilled workers carrying out simple routine tasks that required little training. The workers were unable to organize in the new mass production industries, and existing craft unions disintegrated. It was not until the Great Depression of the 1930s that the workers in the new industries, supported by the Roosevelt administration, began to organize along industrial rather than craft lines. In 1937 John L. Lewis's cio began unionizing the automobile, steel, electrical equipment, rubber, and other capital-intensive industries.
The computer-driven information revolution again replaced employees with machines. This time electronically controlled automated equipment operated by white-collar workers reduced both the number of semiskilled blue-collar workers and the influence of the unions in many industries.
With automation and the continuing growth of the labor-intensive service sector of the economy, the capital-intensive manufacturing industries provided a smaller proportion of jobs and of business profits than they had in the past. They remained, nevertheless, the central core of modern industrial economies, providing a constant and increasing flow of existing products and playing an essential role in the commercialization of new processes and products. Major new industries of the mid and late twentieth century--radio, television, man-made fibers, computers, pharmaceuticals, biogenetics--were developed and their products brought into everyday use by long-established enterprises in the older machinery and chemical industries.
This is why the Second Industrial Revolution had an even more profound impact on the evolution of modern economies than did the First. It set patterns of industrial operations and growth that the later transforming industries closely followed.
Alfred D. Chandler, Jr., The Visible Hand: The Managerial Revolution in American Business (1977); Peter Mathias, The First Industrial Nation: An Economic History of Britain, 2nd ed. (1983).
Alfred D.Chandler, Jr.
The Reader's Companion to American History. Eric Foner and John A. Garraty, Editors. Copyright © 1991 by Houghton Mifflin Harcourt Publishing Company. All rights reserved.
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