The US rises in power 23/03/2007 09:00:00

1876 fair in Philadelphia

• The Us was becoming an industrial society
• By 1900 the Us vaulted ahead of western European nations
• Changes in manfufacturing, mining, agriculture, transportation, and
communication
International trade between 1820-1920
• us comparative advantage had changed from 1820 to 1920 away
from agricultural production in favor of manufacturing . The US also
saw a steady decline in in import of finished manufactures and an
increase in finished manufactured exports. This was because of
strong industrial development and Yankee innovation
o however during the same time exports, were only about 6-7%
of GNP. In colonial times exports were roughly 15-20% of GNp
the reason was because:
 as the percentage of GNP it decreaed, but it was
actually increased
o The same held true for imports
• Independence ratio is exports+imports divided by GDP
o assume price level is constantin 1825 exports= $400 imports
$500 GNP= $3,500 ….900/3500= ,25
• even though international trade was increasing in real terms it was
decreasing in percentage terms
• this being said in certain industries exports and imports figured
more prominently
o ex: 20% of agricultural production went to export imported
items included diamonds, coffee tea cut glass and high
graded china
Industrial deelopement
• The us owned its industrial development fgorwth to six factors
o abundance of natural resources
 coal iron, timber, petroleum, waterpower this allowed
for greater self sufficiency
o large and growing labor pool
 arge flock of European immigrants
 15 million from 1890 to 1914
o expanding national markets/growing urban population
  birth rates were brutally high
 increased aggregate demand
 devoured goods
o new technological innovations
 the kerosene industry and inventions such as the
harvester and combine helped foster a firm agricultural
base in the US
 Bessemer process developed in the latee 1850s made
steel production possible blast air through molten iron
burn off carbon resulting in more uniformed and durable
quality steel
o Te government during this time promote economic growth at
all levels, federal, state, and local
 Gave land away way below market prices
 gave commitment to private property
 businesses faced few legal social barriers
 peace and stablitiy

o Entrepreneurs flourished at this time
 Captains of industry
 Assumed risk!
 Age of robber barons
• Jp morgan----finance
• Andrew Carnegie----Steel
• John D. Rockefeller----Oil
• William Kelly----Steel
• Because of all these facotors GDP grew between 1865-194 gew a
4% a year in real terms
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23/03/2007 09:00:00