I Industrialization

The Industrial Revolution was the transition to new manufacturing processes in the period from about 1760 to sometime between 1820 and 1840. This transition included going from hand production methods to machines, new chemical manufacturing and iron production processes, improved efficiency of water power, the increasing use of steam power, the development of machine tools and the rise of the factory system. Textiles were the dominant industry of the Industrial Revolution in terms of employment, value of output and capital invested; the textile industry was also the first to use modern production methods. The Industrial Revolution began in Great Britain and most of the important technological innovations were British.

The Industrial Revolution marks a major turning point in history; almost every aspect of daily life was influenced in some way. In particular, average income and population began to exhibit unprecedented sustained growth. Some economists say that the major impact of the Industrial Revolution was that the standard of living for the general population began to increase consistently for the first time in history, although others have said that it did not begin to meaningfully improve until the late 19th and 20th centuries. At approximately the same time the Industrial Revolution was occurring, Britain was undergoing an agricultural revolution, which also helped to improve living standards and provided surplus labor available for industry.

Mechandised textile production spread from Great Britain to continental Europe in the early 19th century, with important centers of textiles, iron and coal emerging in Belgium, and later in France. Since then industrialization has spread throughout much of the world. The precise start and end of the Industrial Revolution is still debated among historians, as is the pace of economic and social changes. GDP per capita was broadly stable before the Industrial Revolution and the emergence of the modern capitalist economy, while the Industrial Revolution began an era of per-capita economic growth in capitalist economies. Economic historians are in agreement that the onset of the Industrial Revolution is the most important event in the history of humanity since the domestication of animals and plants.

The First Industrial Revolution evolved into the Second Industrial Revolution in the transition years between 1840 and 1870, when technological and economic progress continued with the increasing adoption of steam transport (steam-powered railways, boats and ships), the large-scale manufacture of machine tools and the increasing use of machinery in steam-powered factories.

The Second Industrial Revolution,

also known as the Technological Revolution was a phase of rapid industrialization in the final third of the 19th century and the beginning of the 20th. The First Industrial Revolution, which ended in the early-mid 1800s, was punctuated by a slowdown in macro inventions before the Second Industrial Revolution in 1870. Though a number of its characteristic events can be traced to earlier innovations in manufacturing, such as the establishment of a machine tool industry, the development of methods for manufacturing interchangeable parts and the invention of the Bessemer Process, the Second Industrial Revolution is generally dated between 1870 and 1914 up to the start of World War I.

Advancements in manufacturing and production technology enabled the widespread adoption of preexisting technological systems such as telegraph and railroad networks, gas and water supply, and sewage systems, which had earlier been concentrated to a few select cities. The enormous expansion of rail and telegraph lines after 1870 allowed unprecedented movement of people and ideas, which culminated in a new wave of globalization. In the same period new systems were introduced, most significantly electrical power and telephones. The Second Industrial Revolution continued into the 20th century with early factory electrification and the production line, and ended at the start of the First World War.

A synergy between iron and steel, railroads and coal developed at the beginning of the Second

Industrial Revolution. Railroads allowed cheap transportation of materials and products, which in

turn led to cheap rails to build more roads. Railroads also benefited from cheap coal for their steam

locomotives. This synergy led to the laying of 75,000 miles of track in the U.S. in the 1880s, the

largest amount anywhere in world history.

The Bessemer process was the first inexpensive industrial process for the mass-production of steel from molten pig iron before the development of the open hearth furnace. The key principle is removal of impurities from the iron by oxidation with air being blown through the molten iron. The oxidation also raises the temperature of the iron mass and keeps it molten.

The modern process is named after its inventor, the Englishman Henry Bessemer, who took out a patent on the process in 1856.] The process was claimed to be independently discovered in 1851 by the American inventor William Kelly, though there is little to back up this claim. Andrew Carnigie brought this to the US.

A market economy 

is an economy in which decisions regarding investment, production, and distribution are based on market determined supply and demand, and prices of goods and services are determined in a free price system. The major defining characteristic of a market economy is that investment decisions

and the allocation of producer goods are mainly made by cooperative negotiation through markets.[3] This is contrasted with a planned economy, where investment and production decisions are embodied in a plan of production established by a state or other body with control over economic resources.

 planned economy

 Type of economy that gives the government total control over the allocation of resources. A planned economy alleviates the use of private enterprises and allows the government to determine everything from distribution to pricing. Planned economies basically give the government dictatorship type control over the resources of the country. Planned economies can provide stability, but also can limit the growth and advancement of the country if the government does not allocate resources to the innovative enterprises.

Invention

something newly  designed  or created , or the activity  of designing  or creating  new things.

Innovationa new idea, device, or method the act or process of introducing new ideas, devices, or methods

Social Darwinism is a name given to various phenomena emerging in the second half of the 19th century, trying to apply biological concepts of natural selection and survival of the fittest in human society. The term itself emerged in the 1880s. The term Social Darwinism gained widespread currency when used after 1944 by opponents of these earlier concepts. The majority of those who have been categorized as social Darwinists did not identify themselves by such a label.

Laissez Faire

is an economic system in which transactions between private parties are free from government interference such as regulations, privileges, tariffs, and subsidies.

Vertical integration 

In microeconomics and management, vertical integration is an arrangement in which the supply chain of a company is owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It is contrasted with horizontal integration, wherein a company produces several items which are related to one another. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership, but also into one corporation (as in the 1920s when the Ford River Rouge Complex began making much of its own steel rather than buying it from suppliers).

Vertical integration is one method of avoiding the hold-up problem. A monopoly produced through vertical integration is called a vertical monopoly.

Nineteenth-century steel tycoon Andrew Carnegie's example in the use of vertical integration led others to use the system to promote financial growth and efficiency in their businesses.

Vertical integration can be an important strategy, but it is notoriously difficult to implement successfully and—when it turns out to be the wrong strategy—costly to fix.

 

A diagram illustrating vertical integration and contrasting it with horizontal integration

Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers. Contrary to horizontal integration, which is a consolidation of many firms that handle the same part of the production process, vertical integration is typified by one firm engaged in different parts of production (e.g., growing raw materials, manufacturing, transporting, marketing, and/or retailing).

There are three varieties: backward (upstream) vertical integration, forward (downstream) vertical integration, and balanced (both upstream and downstream) vertical integration.

A company exhibits backward vertical integration when it controls subsidiaries that produce some of the inputs used in the production of its products. For example, an automobile company may own a tire company, a glass company, and a metal company. Control of these three subsidiaries is intended to create a stable supply of inputs and ensure a consistent quality in their final product. It was the main business approach of Ford and other car companies in the 1920s, who all sought to minimize costs by integrating the production of cars and car parts, as exemplified in the Ford River Rouge Complex.

A company tends toward forward vertical integration when it controls distribution centers and retailers where its products are sold.

Horizontal integration

The process of a company increasing production of goods or services at the same part of the supply chain. A company may do this via internal expansion, acquisition or merger. The process can lead to monopoly if a company captures the vast majority of the market for that product or service.

An example of horizontal integration in the food industry was the Heinz and Kraft Foods merger. On March 25, 2015, Heinz and Kraft merged into one company. Both produce processed food for the consumer market.

Sysco had planned to acquire US Foods before a federal ruling against the deal. lt would have been horizontal integration, as both distribute food to restaurants, healthcare, and educational facilities.

7.9 The 1890 Sherman Antitrust Act

Congress passed this act in 1890, and this is the source of all American antimonopoly laws. The law forbids every contract, scheme, deal, conspiracy to restrain trade. It also forbids conspirations to secure monopoly of a given industry. The ideas were new and had to wait before they could achieve some efficiency. The Standard reorganized once more, in a holding in the Standard Oil Company (New Jersey) which now coordinated the whole machine, that is 70 companies and 23 refineries controlling 84% of the crude oil refined in the US in 1899. Ten years later, international competition (from Canada, Peru, Rumania, Poland, India or Russian) and the struggle of the independents lowered this percentage to 14 %. Theodore Roosevelt committed himself in 1901 and during both of his mandates to a strong war against monopolies, launching the federal government in

1906 in a lawsuit against the Standard because of discriminatory practices on the market, abuse of power and excessive control on the American oil industry.

7.10 Dismantling of the Standard Oil

In 1911, the Supreme Court finds the Standard Oil in violation of the 1890 Sherman Antitrust Act because of excessive restrictions to trade, and in particular its practice of buying out the small independent refiners or that of lowering the price in a given region to force bankruptcy of competitors. The court ordered the Standard Oil Company (New Jersey) to dismantle 33 of its most important affiliates, giving the stocks to its own shareholders and not to a new trust. From these offspring will come Exxon, Mobil, Chevron, American, Esso (that is SO).

This is a landmark ruling in the economic history of the USA, and is the basis for a new doctrine in American antitrust policy, called the rule of reason (because of the famous unreasonable restraints to trade mentioned in the  Sherman Antitrust Act. Need for more solid juridical basis led to the  Clayton Antitrust Act in 1914, which explicitly condemns commercial practices like price discrimination, exclusive commercial relations, the buying out of competitors and the incestuous boards

The Interstate Commerce Act of 1887 is a United States federal law that was designed to regulate the railroad industry, particularly its monopolistic practices. The Act required that railroad rates be "reasonable and just," but did not empower the government to fix specific rates. It also required that railroads publicize shipping rates and prohibited short haul or long haul fare discrimination, a form of price discrimination against smaller markets, particularly farmers. The Act created a federal regulatory agency, the Interstate Commerce Commission (ICC), which it charged with monitoring railroads to ensure that they complied with the new regulations.

The Act was the first federal law to regulate private industry in the United States. It was later amended to regulate other modes of transportation and commerce.

Sherman Silver Purchase Act, 1890, passed by the U.S. Congress to supplant the Bland-Allison Act of

1878. It not only required the U.S. government to purchase nearly twice as much silver as before, but also

added substantially to the amount of money already in circulation. The Sherman Silver Purchase Act

(supported by John Sherman only as a compromise with the advocates of free silver) threatened, when

put into operation, to undermine the U.S. Treasury's gold reserves. After the panic of 1893 broke,

President Cleveland called a special session of Congress and secured (1893) the repeal of the act.

The First Transcontinental Railroad (known originally as the "Pacific Railroad" and later as the "Overland Route") was a 1,907-mile (3,069 km) contiguous railroad line constructed between 1863 and 1869 that connected the existing eastern U.S. rail network at Council Bluffs, Iowa with the Pacific coast at San Francisco Bay. The rail line was built by three private companies over public lands provided by extensive US land grants. Construction was financed by both state and US government subsidy bonds as well as by company issued mortgage bonds. The Western Pacific Railroad Company built 132 mi (212 km) of track from Oakland/Alameda to Sacramento, California. The Central Pacific Railroad Company of California (CPRR) constructed 690 mi (1,110 km) eastward from Sacramento to Promontory Summit, Utah Territory (U.T.). And the Union Pacific built 1,085 mi (1,746 km) from the road's eastern terminus at Council Bluffs near Omaha, Nebraska westward to Promontory Summit.

The railroad opened for through traffic on May 10, 1869 when CPRR President Leland Stanford ceremonially drove the gold "Last Spike" (later often referred to as the "Golden Spike") with a silver hammer at Promontory Summit. The coast-to-coast railroad connection revolutionized the settlement and economy of the American West. It brought the western states and territories into alignment with the northern Union states and made transporting passengers and goods coast-to-coast considerably quicker and less expensive

The Cross of Gold speech was delivered by William Jennings Bryan, a former United States Representative from Nebraska, at the Democratic National Convention in Chicago on July 9, 1896. In the address, Bryan supported bimetallism or "free silver", which he believed would bring the nation prosperity. He decried the gold standard, concluding the speech, "you shall not crucify mankind upon a cross of gold".[1] Bryan's address helped catapult him to the Democratic Party's presidential nomination; it is considered one of the greatest political speeches in American history.

For twenty years, Americans had been bitterly divided over the nation's monetary standard. The gold standard, which the United States had effectively been on since 1873, limited the money supply but eased trade with other nations, such as the United Kingdom, whose currency was also based on gold. Many Americans, however, believed that bimetallism (making both gold and silver legal tender) was necessary for the nation's economic health. The financial Panic of 1893 intensified the debates, and when Democratic President Grover Cleveland continued to support the gold standard against the will of much of his party, activists became determined to take over the Democratic Party organization and nominate a silver-supporting candidate in 1896.

Bryan had been a dark horse candidate with little support in the convention. His speech, delivered at the close of the debate on the party platform, electrified the convention and is generally credited with

getting him the nomination for president. However, he lost the general election to William McKinley and the United States formally adopted the gold standard in 1900.