Industrial Revolution

This article presents an overview of the industrial revolution in the United States and other developed nations in the nineteenth century. Although the United States is often associated with what is termed the "second industrial revolution" that began circa 1870, technical innovations or appropriations in the New England textile industry before 1840 established the groundwork for much of the later growth of the national economy. The story of the industrial revolution in Europe and Britain is characterized by a more obvious historical change than in the United States; it first emerged after several centuries of demographic and economic stasis and then spread to the United States and Europe. In the United States, by contrast, the story is one significant element within the relatively high rate of demographic, geographic, and economic expansion. The conventional explanations for the industrial revolution have involved technological advances or changes; later interpretations emphasized the expansion of financial organization and political policies that were conducive to technology-based economic growth.

Work & the Economy > The Industrial Revolution

Overview

A few decades before the year 1800, Europe was largely confined by what is termed the "Malthusian trap": populations remained stable because there was only enough food and surplus income to sustain a limited number of people, and new technological or economic innovations had only resulted in very brief population surges. Britain was the first nation to escape the so-called Malthusian trap through labor-saving innovations in the agricultural and textile industries. The agricultural innovations were largely appropriated from the Netherlands, but the technological innovations were native to Britain.

Although the United States is often associated with what is termed the "second industrial revolution" that began circa 1870, technical innovations or appropriations in the New England textile industry before 1840 established the groundwork for much of the later growth of the national economy.

The Textile Industry, Firearms, & the Domestic Application of Machine-Tools

The mechanical innovations of the industrial revolution initially grew out of the British textile sector. In the 1700s, the so-called "mule" mechanized spinning technique for transforming raw fabric fibers into cloth and the power loom performed a similar task for fabric weaving. Later, steam-powered cotton spinners with 1000 spindles replaced the single-spindled manual model (Bessen, 2000). Between 1760 and 1870, British textile productivity rose fourteen fold, or 2.4 percent annually and 27 percent annually in the 1860s (Clark, 2007, pp. 233-234).

As early as the 1790s New England spinning wheels switched from working with cotton to linen or wool, while the more important cotton work was distributed to single-task specialists. These specialists often worked in their own homes under what was known as the "putting-out system" (Gunderson, 1976, p. 157). About 25 percent of the population of New England was employed in a relatively specialized capacity making components of textiles or shoes (Madrick, 1995, p. 29).

The British government banned the emigration of knowledgeable technicians such as cotton "mule" mechanics in an effort to protect the technology, but some mechanics had smuggled themselves out of the nation by the 1790s in response to ads in American newspapers that promised rewards for anyone possessing such technical knowledge. By 1812, more than 300 British mechanics were employed in and near Philadelphia alone. The best-known early émigré was Samuel Slater, who helped establish the Rhode Island textile industry and is often credited for introducing the factory system in the United States.

In 1814 Francis Cabot Lowell, a Boston entrepreneur who had visited and secretly documented British cotton operations, established the so-called Waltham Plan. The Plan was designed to avoid the sordid social conditions of industrial towns in England. It employed young women who were not yet of marriage age and provided cultural events, boarding rooms, and mandatory church services; curfews were enforced and alcohol consumption was banned. It was presented to the public as a philanthropic enterprise, but it was also more commercially successful than competing mills. The Waltham Plan centralized all fabric production, including weaving, dying, and finishing in one location for the first time. Lowell's operation soon became both faster and more automated than its British counterparts, rendering it less labor intensive (Gunderson, 1976, p. 159-60). The Waltham textile business eventually led to the development of other industries. An independent machine-making workshop was eventually established by Lowell's business, and it was selling machinery to other mills by the 1830s.

Standardization

Standardization, or the interchangeability of parts, simply denotes that each manufactured component will be identical, or identical enough to allow any similar component to function in place of another with minimal finishing or fashioning. This level of consistent manufacturing was expensive, but it also saved labor at the assembly and repair stage. Standardization also led naturally to mass production, often in an organized system known as an assembly line, and the increased specialization (and to some degree, "deskilling") of the labor force (Bessen, 2000).

Standardization developed fairly quickly as a means of controlling labor costs. American firearms assemblers, for example, could complete twenty-five units a day, whereas their British counterparts could only complete two due to the time involved with fashioning less-standardized components. Standardization also rendered the repairing process quicker and less expensive (Gunderson, 1976, pp. 174-177).

Standardized parts, however, were much more technologically exacting and expensive to produce in the early stages and, as such, a very large market for standardized products was required. The United States had such a market. Cotton gin pioneer Eli Whitney, aided by the reputation garnered by sales of the cotton gin, popularized the idea of standardization or, as he termed it, "interchangeable parts." The automated flour milling plant, using conveyors and elevators and first developed in Philadelphia in 1784, was similarly designed to minimize the labor involved in moving raw and processed materials around production areas and into and out of transportation vessels (Gunderson, 1976, pp. 175-178).

The domestic application of standardized technology initially based on the production of firearms also developed quickly. By the 1850s, a metal-milling machine resembling a wood lathe was used to make knives and firearm parts, and also parts for sewing machines, bicycles, textile machinery, locomotives, clocks, watches, typewriters, and various pieces of hardware (Russell, 2005). The well-known assembly line (or "continuous processing" production) associated with Ford automobiles during the twentieth century had its origin in the "disassembly line," which was also designed to save labor. The disassembly line was developed circa 1815 in Cincinnati to perform the manual work of moving pig carcasses via hooks past workers, each of whom performed one specific task very quickly (Gunderson, 1976, p. 175).

Between 1900 and 1916, the consumer cost of a Model T Ford fell from $3,000 to $360, as its construction (or "throughput") time fell from twelve hours to about an hour-and-half. Ford also, however, took standardization a step too far for market tastes; it only produced one model of automobile. General Motors did extremely well by offering a variety of models, including luxury cars. The Carnegie Steel Company, which exemplified "vertical integration" (that is, the monopoly created by the combined ownership of natural resources, transportation, and manufacturing) took the opposite tack and, due to often criticized decisions of its managers and lawyers, cut its "throughput" time. Somewhat ironically, this tactic (or error) allowed the company to avoid the Sherman Anti-Trust Act, a key piece of anti-trust legislation that was enacted in 1890 by future US president Theodore Roosevelt (Schmenner, 2001).

The factory system was not an American invention, but US innovations in factory organization and technology became widely influential. American innovations tended to originate on the factory floor through the "learning-by-doing" process of gradually refining production techniques. Thomas Edison and other early innovators, furthermore, often had investors, salesmen, and managers who allowed them to recover research costs through commercial promotion and sales.

Further Insights

Geography, Economies of Scale, & America's Unique Industrial Revolution

The relatively low ratio of people to land in the nineteenth century United States became a distinct advantage once the efficiency of transportation improved. By 1820, grain could be economically transported twice as far as it could be during the Revolutionary period, and the United States became known as the "granary of Europe." Trade traveling via the Erie Canal and the Mississippi River increased by well over ten fold between 1824 and 1850. Between 1858 and 1890, railroad shipping costs more than halved. The 1890 Census revealed that all available land had been claimed. Industrialization, however, was another sort of "frontier" that allowed for economic expansion (Madrick, 1995, pp., 45, 22-23).

Local economic self-sufficiency had been the norm until about 1815. Key products such as clothes, furniture, and iron goods were soon available more affordably due to both cheaper mass production and cheaper transportation. Processed goods such as flour, furniture, or iron-ware, were also much lighter — and therefore, cheaper — to transport than raw materials. Before 1815, several industries — such as New England distilleries, Louisiana sugar mills, tar kilns in North and South Carolina, and Atlantic salt-works — were already the largest such operations in the world. Steam and electric power would soon allow industrialization to develop in areas without local access to water power.

Some key inventions, such as the internal-combustion engine, the open-hearth furnace, and the steam engine were imported from Europe. The cotton gin and the electricity-related innovations of Thomas Edison also made their way to Europe. The size of the domestic market for American-made goods, however, did set the United States off from other nations that could not absorb such a high quantity of mass-produced goods. The United States also enjoyed the greatest availability of affordable natural resources (Madrick, 1995, pp. 39-40). The natural influx of immigrants from Ireland and Germany was not sufficient to meet the demands of the railroad industry by the 1870s, and recruiters were sent to Europe to find more laborers (Madrick, 1995, p. 44).

Investment in employee training can be described as a form of "human capital." Investments in human capital at the Lowell textile mills in Massachusetts was probably even higher for mule spinners (as textile machine operators were known) than for apprentices to skilled artisans (such as carpenters and potters) who also functioned as assistants to their masters. After updated technology was added in 1834, the Lowell operation was about twice as productive as its local competitors. It initially hired more literate workers for both spinning mules and power looms, but by the 1840s illiterate immigrant workers were hired more often as the pool of experienced workers grew; its "organizational" learning appears to have been superior to that of its competitors (Bessen, 2000). Literate workers were about 15 percent more productive than illiterate workers at first but also more likely to leave the job in the first three months for better opportunities. As such, employing more illiterate workers reduced turnover costs. Illiterate workers soon became more beneficial in the view of many industrial employers (Bessen, 2000).

Management & Marketing

Early business executives in the United States had often received training in engineering at the US Military Academy at West Point and had primarily military experience. These executives often attempted to impose a strictly hierarchical system of corporate organization. American immigrant workers resisted this strict chain of command less so than European workers. The American experience was also different than that of England, Japan, and European nations in that there was little tradition of middle-management in the United States, whereas other nations had a large stock of experienced civil servants on which to draw. As such, the managerial class in the US tended to be mechanics drawn from the industry itself who often did not automatically command the respect usually conferred upon established public administrators (Cochran, 1977, p. 54). Business leaders in Germany and Japan, by contrast, enjoyed the authority conferred by subordinate workers in a more hierarchical society (Cochran, 1977, p. 6).

The American market also introduced a new combination of standardization and aggressive marketing. For example, an automated cigarette maker was 40 times faster and 99 percent more cost-effective than the use of manual laborers, and one cigarette maker subsequently spent 25 percent of its profits on a marketing campaign to encourage tobacco consumers to switch from chewing to smoking. Specialized breakfast foods developed from a marketing campaign that was derived from the milling industry's attempt to dispose of its leftover grain supply (Madrick, 1995, pp. 46-50). Steel production in the late nineteenth century improved its production time by more than 300 fold while cutting its workforce by about 90 percent (Madrick, 1995, pp. 47-48). The phrase "economies of scale" is usually used to described the reduction in labor and resource expenses that result from increased speed of production. The phrase "economies of speed" could be used in its place (Schmenner, 2001).

These rapid economic changes explain why employment patterns could be erratic, even though the economy was growing. Periods of unemployment for laborers, on average, were shorter than they were in the twentieth century. Between 1860 and 1900, the number of Americans working in manufacturing increased from one million to ten million, even as improved efficiency reduced the number of workers required to maintain or increase productivity. Among entrepreneurs, wealth was often gained or lost within a period of years or decades. Between 1860 and 1914, there were three severe recessions and six other notable recessions.

Technology Innovation

Europeans visiting the United States in the nineteenth century often described Americans as overassertive, intensely serious and somber, entirely preoccupied with their work, optimistic, and eager to assume risk. One historian adds some rather disparagingly qualifications to this list: "a desire to be more than they were" and, more generally, what is now termed an inferiority complex. This combination of traits, however, was clearly conducive to economic expansion. American businesses were apparently less constrained by conventional modes of operating than their European counterparts and were, as such, open to innovation amid a trail-and-error process (Cochran, 1977, pp. 8-10).

Whereas economic conditions generally encouraged innovation, the legal environment was not protective of individual inventors. Patents on inventions were usually not enforceable. Clark (2007) characterizes this scenario as beneficial primarily to industrialization itself: "Since most of the benefits of these [intellectual] investments did not flow to the investors, the result was a seemingly costless expansion of the efficiency of the economy. These gains in efficiency in turn induced more investment in physical capital" (p. 208).

Eli Whitney's attempt to enforce his patent on the cotton gin similarly resulted only in expensive litigation. He did proceed, however, to prosper as a firearms manufacturer. Those innovations in England usually resulted in lower prices for consumers. In the United States economic innovations (primarily in the form of monopolies) in the late nineteenth century often resulted in fortunes that created philanthropic organizations and universities (Clark, 2007, pp. 235-236).

Innovation of Thought

Mokyr (1999) identifies the Enlightenment emphasis on rationalism during the seventeenth and eighteenth centuries and on spreading knowledge as a causal factor that triggered the industrial revolution. He uses the terms "positive feedback" and "negative feedback" to explain why earlier intellectual discoveries did not lead to immediate results. For example, the vaccination process against disease was developed in 1796, and yet it took an addition hundred years for the process to be properly implemented because "germ theory" was not yet understood. In other worlds, it took a hundred years until "positive feedback" revealed results for that particular innovation. "Negative feedback," or poor results due to improper application, was the norm for intellectual innovations before 1800 (Mokyr, 1999).

More generally, Mokyr (1999) identifies several broad trends that emerged circa 1800: the proliferation of specialized professions such as engineers and accountants; the switch to vernacular languages from Latin for scientific and technical writing; increased literacy rates and public access to information through cheap books, newspapers, lending libraries, and encyclopedias; the development of mathematics as a universal language; a new emphasis on empiricism rather that established authority; and increased confidence in rationality and that the natural world could be understood through observation — although physics and chemistry have still not yet been fully explained. After 1815, the use of statistical information to study demographics, crime, medicine, and public health expanded through what were known as statistical societies. By 1850 in Britain, there were 1,020 associations that promoted the study of scientific and technical knowledge with about 200,000 members (Mokyr, 1999). However, Clark (2007) argues that Mokyr's perspective should be qualified by the likelihood that the Enlightenment itself was the result of earlier changes in the economy that rendered the emphasis on rationality more profitable (p. 209).

Viewpoints

The Primacy of Technology

It has been argued that there had long been a strong degree of consensual opposition to new intellectual developments before 1800. Some German guilds (union-like groups of skilled workers) explicitly prohibited any innovations (Mokyr, 1999). Medieval guilds in Britain similarly discouraged innovation in at least two ways: their exclusive and restrictive nature benefited members who opposed any alteration in working practices; and they tended to use their financial resources to support an embattled monarch and thereby secure future support from that monarch (Clark, 2007, p. 218).

This sort of restrictive practice sometimes emerged at the corporate level in nineteenth-century America, but it did not always last long. General Electric (GE) was initially secretive and attempted to exclude other companies from developing specific electrical currents (either AC or DC) for the purposes of energy transmission; but GE soon reversed course when sharing techniques proved to be more mutually beneficial and practical. Circa 1900, the early patents of Edison and Alexander Graham Bell were about to expire, and some shared use of technology helped GE and AT&T maintain their economies of scale. Both companies also adopted a more deliberate approach to research and development in the 1870s rather than maintaining the "learning-by-doing" method. By 1901, Germany, Britain, and the United States had established national laboratories to set technology-related standards. Germany was the leading country in physics and chemistry. The mutually beneficial relationship between universities and corporations in the United States arrived later than in Europe (Russell, 2005).

Earlier in the nineteenth century, however, the emphasis appeared to be more on technological advancement than economics: "In hardware, particularly, Americans showed their tendency to use machinery in place of labor, to be more interested in improving processes than in carefully calculating marginal costs. The experience of Eli Whitney in firearms was a continual example of overconfidence in the economies brought by machines" (Cochran, 1977, p. 45). In short, technology was often used in an attempt to counteract other deficiencies in the manufacturing industry. In organizational terms, however, the developments of the second industrial revolution are still in full operation. Two such elements are mass distribution and efficient inventory management. These organizational methods are precisely the ones later used by large corporations such as Wal-Mart and Dell (Russell, 2005).

Cochran (1977) discounts the traditional emphasis on technology and emphasizes the "entrepreneurial decisions necessary for its economic use, and instead seeing the technological advances as following the demands of men motivated by new elements in the business-political-social system" (p. 12). Cochran, an economic historian, re-terms the industrial revolution "the business revolution." Mokyr's interpretation of the industrial revolution can implicitly be termed the "knowledge revolution."

A Bigger Picture

Clark (2007) argues that the industrial revolution actually emerged in 1600 and describes the period between 1760 and 1860 as "a blip, an accident, superimposed on a longer-running upward sweep in the rate of knowledge accumulation that had it origins in the Middle Ages or earlier" (p. 10). This approach is then pushed back almost three centuries further to postulate that the establishment of settled agrarian society in Babylonia in 2000BC, which accumulated large quantities of capital, was essentially the same in material terms as British society in 1800: "the intervening years had profoundly shaped the culture, and maybe even the genes, of the members of agrarian societies" (p. 10). Much of Clark's new research is based on British wills from 1200 to 1800, and that data reveals that the upper classes consistently reproduced more often than peasants. As such, the British population was characterized by downward social mobility as the offspring of upper and middle-class families assumed the jobs formerly held by peasants. The distinction between cultural conditioning and genetic alteration is clearly a very large one. Clark acknowledges that the cultural transmission of behavior such as a willingness to work long hours and the ability to save income is a viable alternative theory to genetic evolution. Unsurprising, Clark's interpretation of the new data he provided was very controversial at the time (Wade, 2007).

Still, in subsequent years, other researchers backed up Clark's claim that the industrial revolution began in the seventeenth century. For example, Leigh Shaw-Taylor, a University of Cambridge economic historian, led a team that published research in 2024 that backed up Clark's interpretation of the industrial revolution as a phenomenon that began decades earlier than previously thought.

Terms & Concepts

Malthusian Trap: The term Malthusian Trap refers to the historical condition described by the Reverend Thomas Malthus just before the first industrial revolution. The concept, or condition is one in which most workers were undernourished and population growth only occurred briefly after periods of mass death, such as plagues. Another way to describe it is a society in which "physical capital" is higher than "human capital" and which the industrial revolution began to reverse. A "post-Malthusian" society, in this context, is one in which savings often replace a greater quantity of children (Wang, 2005).

Standardization: Standardization, or the interchangeability of parts, simply denotes that each manufactured component will be identical, or identical enough to allow any similar component to function in place of another with minimal finishing or fashioning. This level of consistent manufacturing was expensive, but it also saved labor at the assembly and repair stage. Standardization also led naturally to mass production and the increased specialization (and to some degree, "deskilling") of the labor force (Bessen, 2000). Thomas Jefferson had praised standardization in the French firearms industry. Eli Whitney is often credited with popularizing the idea of standardization in the early nineteenth century. (Russell, 2005).

Systemization: Systematization involves the means by which labor and marketing are organized. Standardization, by contrast, is concerned with the goods that are produced (Russell, 2005). In many later industrial workplaces, technology was designed specifically to render skilled labor less necessary: "So-called scientific management reduced every task in the manufacturing process to its smallest components, with human effort itself as merely one component of a large machine. Work was divided and specialized into simple tasks, and then divided and specialized into even more simple ones…. The machine became not only a model but a metaphor for human organization…and the worker was essentially another cog in the process" (Madrick, 1995, pp. 51-52).

Waltham Plan: The Waltham Plan, a textile manufacturing system established in 1814 by Francis Cabot Lowell, was designed to avoid the sordid social condition of industrial towns in England. It employed young women who were not yet of marriage age and provided cultural events, boarding rooms, and mandatory church services; curfews were enforced and alcohol consumption was banned. It was presented itself to the public as a philanthropic enterprise, but it was also more commercially successful than competing mills. The Waltham Plan centralized all fabric production, including weaving, dying, and finishing in one location for the first time. Lowell also successfully lobbied the federal government to impose a high duty on foreign products similar to the sort of affordable goods his factory produced (Cochran, 1977, p. 45).

Bibliography

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