We all know that America is at the forefront of economic power
We all know that America is at the forefront of economic power, and therefore is the leading powerhouse in the world, however this was not always the case. I will examine America’s rise in the 19th century, and the principal features of its economic growth. This century was the most important in America’s rise to the top; it was a time of revolution, reconstruction, organisation and opportunity, which would set-up America for its forth-coming dominance. Before we enter the 19th century, it would be good to get an idea of the situation leading up to this period.
The 18th century, showed a small increase in economic success, however at this time Britain was still the dominant power in the world. There was a population growth leading to more consumers and more markets to exploit. At this stage America was reliant on slavery especially in the south, exports of farming, and an integrated Atlantic trade. So at this point America was growing but not at any astonishing rate, but it did lay the ground for success, if America was willing to take the opportunity.
This kindly leads up to the development of America as an economic power. I will discuss the nineteenth century in two parts; the first one of realising business theory, and the second was integrating it into society and improving on it. The early half of the nineteenth century was one of growth and change for this nation. It would probably best to start with Thomas Jefferson who was a main feature for this period of growth; he was elected president on March 4th 1801.
Thomas Jefferson was a Republican, at this time Republicans strongly supported farming and in turn they wanted an agrarian nation, for this to happen changes were needed to be made, such as; development of strong trades with other countries, and the need for land to farm on, this led to the Louisiana purchase. At this time the French owned a huge amount of land west of the United States. Inside of this land was the Mississippi River in New Orleans; for America to become this farming nation, would therefore need ports such as this.
Thomas Jefferson asked Napoleon to sell this land, to his surprise he agreed, due to fact Napoleon was involved in war with Great Britain, and needed the money, to purchase resources. With the purchase the nations size doubled, this allowed the farming nation to use the whole of the Mississippi. Jefferson’s next task was important sense of organisation to develop; he hired Lewis and Clark to explore the Louisiana territory, with the main objective being to search for a river passage to the Pacific Ocean, they were told to keep diaries and maps of the areas they explored.
They set out in May 1804, with forty-four men. On their return though disappointment at the fact they did not find an all water route to the Pacific Ocean, they did produce the first map of America. They also aroused an interest in people to move westward in the growing nation. This was important as America showed a philosophy in growing and organisation. It also showed the government help in wanting the nation to grow and succeed. If we flip the coin, we now get to see signs of government hindrance. This was in 1828, when Jackson was elected president, after playing a vital role in the war of 1812 against Britain.
Jackson is said to be the first Western president. He firstly wanted to remove the Indians, get rid of the national bank, and then a tariff that taxed imports. This caused conflict with his vice-president Callhoon, and other people mainly from South Carolina who felt unfairly treated. The consequence of this got worse Callhoon resigned, South Carolina nullified the tariff and threatened to form their own government. This internal conflict threatened the growth of the nation. The reason for the conflict was that America was growing fast and each area had differences and opinions.
Politically the Republicans were farmers, the Federalists supported industry and manufacturing goods. Here we have an example of how the political side helped America’s growth and nearly destroyed. Another difference was the people; many Germans and Irish had immigrated to America during this time. Both came looking for the American Dream. About 1. 5 million German immigrants came to America from 1820 to 1859. They mainly settled in the mid west because they were skilled in farming, with enough money to move there and buy their own land. Though the Irish also came looking for the American Dream, their background was more tainted.
At the time there was a food shortage in Ireland (the potato famine). They unlike the Germans were unskilled and their journey was a terrible one because they were poor, many died on the way. The Irish mostly settled in ports and worked for ‘dirt cheap. ‘ About 2 million Irish people came to the United States from 1820-1859. Both helped transform the nation, as it provided workers for the factories. The Irish however were the ones who had the hardship. Many factories took advantage of them, making them work for pennies, many of these work places being in the cotton industry.
Though this may be considered as the early signs of slavery, it was detrimental in the growth of the American economy. The anti bellum South witnessed the growth of an agrarian economy with the rise of cotton and revival of slavery. Cotton was ‘king’ since production of cotton doubled 10-12 years from 1812 onwards, 50% of American exports were of cotton and the seaboard started a profitable slave trade with cotton planters. Economic prosperity resulted in political domination by planters. The economy of the south was very different than that of the other sections though it was closer to the west as it was agricultural.
There were three main features of the southern economy, the cash crops of cotton, tobacco and sugar, and there was a growing market for these products, which led to them having a thriving economy. This leads us on to the second half of the 19th century, which is where America really accelerated. With businesses only really supplying only local or regional markets, and tending only to be single units, a catalyst was needed to help grow as well as diversification, expansion and forward thinking, which is what developed in this second half of the century.
During this latter period America take over Great Britain as the wealthiest country; the first real fortunes start being made, some sort of organisation, multi nationals and opportunities. The first big business in this era was the railways. The railways indubitably helped the growth of the economy; it linked businesses and transportation together. In 1866, America had railways but not any was interconnecting railway system. The problem was that America was so big, and the obvious problem of trying to connect it together, the next 25 years were probably the most significant element in American development, both in industry and transportation.
In 1890 it was reported the railways took $1 billion, in an attempt to get some comparison, this was $403 million more than the Federal government (who obviously were not happy with this, would try to level this total). After 1865 the emphasis was on profitability for the railroads. Large fixed costs meant the train needed to be fully loaded. Therefore feeder lines were developed. The railway was however not cheap, and needed vast capital. In another feature of the 19th century was Wall Street. By 1855 rail shares accounted for half the negotiable securities traded in the United States.
By the end of the civil war the financial markets of Wall Street and Philadelphia were well established based largely on the transactions of rail stocks. With the introduction of railways stems changes in managerial and business conditions. There were also unique operational complexities associate with the railway, trains had to be scheduled, prices to be established for different passenger fares and freight charges etc. This introduced high levels of specialisation of skills and diversity of these skills, which were required to become a success from the railways.
One of the men to do so was John Rockafella in 1872; he opened up a company to control traffic of oil refinery, he begun to purchase up competitors, and begun one of the first successful monopolies. He opened links with all relevant departments, which affected his business. He had a very centralised technique to business, and adapted well to change. Rockafella is an example of grasping the opportunities available, and using them to your advantage. Rockafella is an example of many men making the first real fortunes.
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