In the 1850’s the U.S. economy was mainly focused on the production of raw materials and food, when ready- manufactured goods were imported from abroad. But in the early 1900’s the American manufacturing industry came to the forefront, providing a third of the world’s production. The industry boom and the introduction of the rail road on the eve of the Civil War laid the foundation for further growth. Mechanization of farm labor led to a formation of the country's food surplus, when expansion of the mining industry has allowed discovering new natural resources. Technological inventions provided the industry with fundamentally new energy sources: electricity came to replace water in steam engines; steady population growth solved the problem with the need for a labor force; domestic and foreign investments have become a reliable support for the country’s monetary system. American companies were now providing all the necessary things not only for consumers, but for other producers as well. All this has given an impetus to the rapid development of heavy industry.
During the period from 1870 to 1900 coal production has increased tenfold, and steel production increased by one hundred forty times; volumes of industrial equipment manufactured in the U.S. has tripled, as did the number of workers employed in the mining and manufacturing, construction and transport; the overall length of railways has increased fivefold. The amount of investment increased six-fold, and manufacture of industrial products increased by 300%. Much of this impressive growth accounted for new industries, such as oil industry, steel, electric, which later was added with automotive. By the beginning of the First World War, the United States was producing as much industrial products, as Britain, France and Germany combined.
Huge capital, rotating in big business, promoted the construction of grandiose production enterprises that allowed the production of more products along with reducing the cost, which lowered the prices, in turn, stimulated sales leading to further production expansion. Speaking of early XX century trends, it should be mentioned that entrepreneurs created a new type of enterprise with unprecedented concentration of capital, production capacity and workforce. Such large-scale conglomerates were called "trusts", which eventually began to appear in almost all industries. By the beginning of XX century giants such monopolistic or oligopolistic control of the market have become commonplace in the economic life of America (in 1904 only 1 % of U.S. companies provided up to 40 % of industrial production). But starting from 1873, every ten years the United States was experiencing cyclical economic crises.
Development of large, concentrated business was accompanied by urbanization of America. In the 1860’s-1910 the number of cities in the country has dramatically increased from 400 to 2200. In parallel, there was a process of urban consolidation that allowed many of cities to double their population every decade. The rural population of the United States has doubled in the given period, whereas the urban population increased seven-fold over the same time period. On the eve of the Civil War only 20 % of all Americans lived in cities, but by 1890 there were 33 %, and by 1910 the figure had risen to almost 50 % (in New York City alone lived 4.6 % of the total population of the United States in early XX century). Such impressive growth was more due to technological rather than social reasons. In the postwar years, most factories switched from water to steam energy, and from now factories could be built anywhere. Because cities offered economic opportunities for the development of large-scale production, the process of decentralization and further centralization and urbanization was set off. But consequences were tragic for people from relatively small cities, which became the focus of immense poverty and deprivation.
As a result, the city population had to settle in cramped and expensive houses, suffering from the lack of water and sanitation. Urbanization entailed another phenomenon characteristic of the end of XIX century which was high immigration. Millions of immigrants thrown out of Europe came to the United States, with many (though not all) intending to settle there permanently. Over time, all major American cities have developed numerous Italian, Jewish and Slavic communities, which occupied the entire neighborhoods. New York, Detroit and Chicago have become cities of foreigners: most of their population (80%) was former immigrants.
Lives of workers, not employed in agriculture, was no better than of farmers. They also had to wage a continuous struggle with the economic depression, reduced production, lowered wages and deteriorating working conditions. All attempts to coordinate the struggle were met with fierce resistance from big business. Endless differences between skilled and unskilled workers, between immigrants and Native Americans, between Protestants, Catholics and Jews, between white and colored men and women, all this made it difficult to consolidate workers, who had a largely infected philosophy of individualism, and did not hurry to join an organized struggle.
Despite all this, the U.S. was booming its economy, becoming the center of world economic development, which relocated from Europe to North America. Becoming the leader of the capitalist world, the United States entered the arena of foreign and colonial expansion at the beginning of XX century.
Bodnar, J. (1997). Steelton: Immigration and Industrialization, 1870–1940 (Pittsburgh Series in Social and Labor History). Pittsburgh, PE: University of Pittsburgh Press.
National Bureau of Economic Research Project Report (1997). Health and Welfare during Industrialization. R. H. Steckel, & R. Floud (Ed.). Chicago, IL: University Of Chicago Press.
Rojahn, J., & Der linden, M. V. (1990). Formation of Labour Movements, 1870-1914: An International Perspective. Leiden, Netherlands: Brill Academic Pub.