- Industrial backwardness in comparison to England.
- Misuse of its natural resource and human capital by the colonial powers. America was developed as raw material supplier (crops and minerals) and no money was spent on the development of industries. British parliament (before American independence) decided all forms of taxation and duties on American goods.
- When British shut down its colonies for other nations to trade, US provided its ports to other colonial powers for trading purposes. This way they earned huge fee and access to other markets. They could easily sell their tobacco. Available capital was channelled into planting, shipping and commerce.
- Cotton factor: rapid economic growth in the nation as a whole was driven by the expansion of the cotton crop and the southern “Cotton Kingdom”.
What US did?
- Expansionary policies adopted to bring more region under administration so as to capture natural resources.
- Embargo act 1807 was passed to retaliate towards Continental system of Napoleon.
- New cotton mills were set up at large scale. Thomas Somers and the Cabot Brothers founded the Beverly Cotton Manufactory in 1787, the first cotton mill in America
- encouraged the expansion of commercial agriculture in southern states.
- Introduction of tariffs to protect the domestic industries from cheaper English imports.
- Americans began gradual shifting of production centres westward. This raised the operating and transportation cost for British traders and gave advantage to American traders.
- In the iron industry, latest new British coal fuelled techniques in smelting and refining was adopted apart from use of ready availability of traditional wood fuel.
- New technological developments: e.g., Sewing machine (Howe, Singer & Wilson).
- Market was left to promote unrestrained social Darwinism and highest form of capitalism.
- After the civil war (1861): new inventions, division of labour, large chunk of new investors and bankers, extensive development of railways (320000km by 1900), roadway and telegraph, high demand in automobile and defence goods changed the fate of US forever.
The products included
- typewriter (1867),
- barbed wire (1874),
- telephone (1876),
- phonograph (early form of record player) (1877),
- electric light (1879),
- petrol engine car (1885).
Impact on American society and economy:
- Rise in urbanisation (50% by 1916). This further caused issues of slums, overcrowding, cheap apartment buildings
- Urban society got divided into rich class, middle and working class and poor class.
- Corruption also flourished in state and local government.
- American author Mark Twain called the era of industrialization “The Gilded Age.” It means an age which included the newly growing rich class that believed in show-off culture. New kinds of luxuries were adopted such as watching live sports, theatres, buying gold, expensive handmade items etc.
- Rise of Progressive Era: demands were raised to reduce poverty, unemployment. In 1886, skilled labourers formed the American Federation of Labor (AFL). Farmers founded the National Grange in 1867.
- Multinational companies were established (e.g., J P Morgan in 1799, DuPont in 1802, Coalgate in 1806, Citigroup in 1812).
- Very high unemployment in later decades of 19th century.
- Re-occurrence of depressions (1873, 1884, 1893, and 1907).
- Growth of middlemen in railways transport, mills and gins wiped-off the profits of farmers and small businessmen.