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How Important Was The American System Of Manufacture To its Growth?

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American industrial revolution
Credit: http://upload.wikimedia.org/wikipedia/commons/c/c3/Hartmann_Maschinenhalle_1868_(01).jpg

From the late eighteenth century to twentieth century, America has been expanding at an alarming rate. Producing more coal than the whole of Europe and half the world’s petroleum by 1913, it quickly became clear that America had become the global technological leader controlling an astonishing 32% market share of world manufacturing output. Previously a colony exploited of its resources, America only gained true independence in 1783 after the American Revolutionary War to become what is currently known as the USA. The question of just how did America overtake its previous colonists to become the leading economic power in such a short time becomes exceedingly important knowing that America was previously a technological follower.

One of the key factors in the rapid expansion of American industries was the unique system of manufacture they used. The use of interchangeable parts produced by machine resulted in a dramatic rise the output per capita whilst minimizing the amount of effort and skill required to perform numerous jobs. The introduction of the assembly line by the Ford Motor Company soon proved instrumental to reducing the skill required of a workforce to construct complex items. Demonstrated by its incredible ability to produce a car in just 36 seconds (1914) it was not long before the system becamewidely applied in American industry, thus ushering in a new era of Fordism. Contrasting the European system of manufacture, in which skilled artisans were used craft customized parts. Issues with this type of manufacture were numerous as the parts produced could not always be attached to a counterpart due to bad fitting and thus required alteration. As a result, crafting even “simple” items such as guns took a much longer time relative to the American system of manufacture. Furthermore, the costs of hiring skilled labor was less available and more expensive, consequently reducing the number of entrepreneurs willing to manufacture goods given that cheap imports were also readily available from America. Described as believing “standardization and mass-production techniques inevitably resulted in an inferior product” (Rosenberg,1994) it was not until many decades later that the UK widely used the American system of manufacture

However does this mean that had Europe defaulted to using the American system of manufacture, similar increases in economic activity was possible? Arguably not. There is little argument that Europe would have achieved some economic gains from using the better system however, the extent of the gain would likely be small compared to what America was able to achieve for several reasons. Primarily, due to the fact that America had factor endowments that could sustain the “second industrial revolution”.  Prior to its rapid expansion in 1860, it could be said that America had been laying down the foundations required to sustain rapid growth. From its independence in 1783 to 1846, America had been steadily expanding west. Through various treaties and agreements America had been able to obtain several states including California, Nevada, Utah, Colorado, Louisiana, Oregon and many of its original colonies. The cheap and readily available land sparked a rapid increase in population as farmers willingly had more children as durable goods to work on farms. Along with immigration, which consisted of roughly 23 per cent of the population increase in 1840, there was no shortage of cheap unskilled labor able to work assembly lines.

 The additional resources gained from the acquired territory paired with the advent of Whitney’s cotton gin fuelled the expansion of the cotton industry which earned an estimated 192 billion in 1860. Profits made by selling foodstuff and cotton would prove invaluable to sustaining the second industrial revolution. Moreover, the increased land and population created a huge domestic consumer market that would prove to be a sufficient incentive to promote the already increased entrepreneurism that resulted from the institutional background of secure property rights. This consumerist market would develop partly due to technological advances in the agricultural sector. The discovery of horse drawn reapers, steel ploughs and seed drills would serve to exponentially increase agricultural productivity (notably in corn and wheat). The increased productivity in turn shift the aggregate demand curve to the right as the supply of staple food was increased (and thus cheaper). Consumers now had an unprecedented level of disposable income which they would use to purchase manufactured goods. Realizing the huge profits that could be made by trading internationally and into an exponentially increasing domestic market, it is no wonder that output of manufactured goods also rose dramatically to keep up with demand. Protectionist policies during the years prior to its great expansion were also essential in aiding the American Expansion. Tariffs that had existed since 1789 proved important in protecting its large market thereby reducing debt and protecting infant industries.

Joseph Schumpeter argues that factor that the leading cause of the economic boom was the improvement of the transport network up to 1860. Most notably was the improvement in the railroad network that was enormously expanded in a very short time. From the year 1830 to 1860 the coverage of the railroad increased from just 23 miles to 30,600 miles, having more coverage than England, France and Germany combined. Implications of this were a dramatic fall in transport costs, allowing the existence of Pan-American companies. Increases in the transport network were not limited to the railroad network as numerous canals were built during the same time period. However the increase did not compare to that of the railroad network. The ability to transport resources cheaply in conjunction with the great social mobility proved to be one of the biggest factors in promoting the exponential growth shown by the American economy as the reduction in transport costs greatly widened the business prospective of entrepreneurs, making previously unviable businesses possible.

While the American system of manufacture was certainly crucial in amplifying the rate at which America developed, it certainly cannot take credit as being much more important than the other factors involved in bringing about the “second industrial revolution”.  Without the great number of preexisting conditions that were in place, the system of manufacture would only achieve much smaller gains. Had there not been low transport and labor costs, industries would struggle to profit and the spirit of entrepreneurship would have been dampened. Moreover, without the massive territory expansion, income generated by producing foodstuffs and cotton would have dramatically reduced as many farmers would no longer have access to the cheap land. Without the revenue and abundant natural resources, fueling a boom would have proved to be difficult. Therefore it can be said that while the American system of manufacture was extremely important to solidifying its position as the global technological leader, it could only have achieved such results in America and not anywhere else due to the places outside America not being endowed with the necessary factors required to achieve exponential growth.



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