The US rises in power 3/23/07 10:00 AM

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
ohowever 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
oThe same held true for imports
•Independence ratio is exports+imports divided by GDP
oassume 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
oex: 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
oabundance of natural resources
coal iron, timber, petroleum, waterpower this allowed for
greater self sufficiency
olarge and growing labor pool
arge flock of European immigrants
15 million from 1890 to 1914
oexpanding national markets/growing urban population
birth rates were brutally high
increased aggregate demand
devoured goods
onew 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
oTe 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

oEntrepreneurs 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
3/23/07 10:00 AM
3/23/07 10:00 AM