Explain Why the American Economy Expanded so Much and so Fast Between 1890 and 1920.
Explain why the American economy expanded so much and so fast between 1890 and 1920. Between 1890 and 1920, the American economy expanded hugely at an extremely fast pace. This growth saw, by 1900, people employed in manufacturing, mining, construction and services rise from 4 million to 18 million and the USA was producing 30% of the worlds’ manufactured goods.
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There were many factors that caused this growth such as the development of the railways, immigration, a large supply of natural resources, the idea of the ‘American Dream’ and monopolies.
One of the biggest factors of the rapid economic expansion was the development in transport and communication systems. The development of the railway provided links that allowed the creation of a national market and access to raw materials. Also, the building of the railroads was a stimulus to industrial development in itself. By 1890, the revenue from railroads was over $1,000 million; double that of the federal government, and the mileage had increased from 30,000 miles to over 190,000 between 1860 and 1900.
This development of the railway was partly due to the mass immigration that came from Europe. The huge, sudden growth in population formed an unending supply if cheap, eager labour. Men were paid considerably small wages to complete tasks such as building the railways. Developments in communications such as the telegraph in 1944 and the telephone in 1876 were also very significant. This allowed large scale management to communicate effectively nationwide and meant that companies could establish operations all over the country with no communication problems.
Industrial development, sales and purchases were also now much easier to deal with and wide scale marketing and advertising spread across the West. Another important factor of the economic growth is the fact that America had an almost unlimited supply of useful natural resources such as coal, iron, lead, copper and timber. These great numbers of natural materials meant that America could almost become self sufficient and needed not to rely on other countries in order to be stable. The USA was able to put high tariffs on the land to protect their goods from foreign competition and the development of he railway meant that the transport of these goods from place to place was made much easier. Furthermore, the powerful entrepreneurs, such as J. P. Morgan, the Rockefellers of New York and Carnegie also played a big part in this economy expansion. The fact that there was barely any regulations on big business meant that people could pretty much do as they pleased when it came to business and companies. These entrepreneurs, controlling much of the economy and the political scene, had a huge amount of control over production and marketing.
The development of monopolies; with one firm controlling an entire market with absolutely no competition, and vertical immigration; with one firm controlling all stages of production, these firms were able to become very powerful and rich. This idea of money and power spread to the everyday citizens in America and became a source of inspiration. These entrepreneurs were living proof of the ‘American Dream’ and gave people more reason to believe that if they too worked hard, they would achieve success.
The ‘American Dream’ was a big pull factor for immigrants. It gave the immigrants hope and belief that they could move to the USA and start a new life. In conclusion, there are many explanations and reasons as to why America’s economy expanded so much in such a small period of time. The rise of big business meant that the economy was thriving and America were almost self sufficient. However, evidently the arrival of immigrants was a huge factor as they mostly built the entire railroad system, allowing huge advances and developments to be made.