Between the 1870s and 1945, the US economy has undergone ups and downs. Several events have impacted on the US economy both positively and negatively. The period witnessed several significant developments in the US economy[1]. The most notable of the historical events during the period that impacted on the US economy is the rapid second industrial revolution that profoundly influenced the US economy. Another significant historical event that affected the US economy during the era was a great depression and the great leap forward of the U.S. economy by mass production of military goods during World War 2. The introduction below is about how the second industrial revolution, the great depression, and the World War2 influenced the US economy between the 1870s and 1945.
The second industrial revolution in the US took place between 1870 and 1914 after the end of the Civil War. The period witnessed massive reconstruction and infrastructure development. The transport sector in particular hugely improved and opened new marketers for agricultural products, banks, industries total eliminating the barter system of trade that was still in existence. The railway transport, in particular, opened up markets and upgraded them from a local scale to a national scale increasing the wealth and money in circulation. It also provided lots of working opportunities[2]. During the period the US was endowed with many natural resources from the territories they had conquered during the civil war. The heavy influx of immigrant workers from Europe who provided labor for the first rising industries during the period was witnessed. Some 13 million European immigrants mainly from Italy, Russia, and the Austo-Hungarian Empire entered the U.S. from 1901-1914[3]. Availability of capital for investment profoundly influenced industrialization and increased the money circulation in the US during this period. Regional trade grew, labor forces and production techniques improved and innovations in the transport sector improved notably steamboats, roads, railway roads, and Eerie[4]. The period, as a result, was witnessed with massive wealth creation and economic growth in the US. By the year 1913, the US was producing a third of the world’s industrial products compared to France, Great Britain and Germany combined[5]. The period witnessed the improvement of living standards of US citizens. Cities in the US rampantly grew thanks to an estimated rural, urban migration and sufficient employment opportunities as a result of industrialization between 1870 and 1920s[6]. The urban population rampantly grew overnight. Despite the massive economic growth, the period also witnessed economic instability between 1873 and 1897 with larger corporations taking over smaller corporations. The larger corporations controlled the marketplace for the maximum benefits during the time. Vertical and Horizontal integration was taking place, causing most of the assets flowing to the hands of very few. Companies instituted assembly lines[7]. Skilled workers became less competitive.
After the US economy become stable due to the success of the industrial revolution, the period between1929 to 1939 was witnessed by the great depression that spell misery on the world’s major economies. The great depression severely affected the US economy. The great depression was caused by the crash in the American stock market value making investors lose confidence. That made them shy away from investing in the US[8]. Banks followed the events and lost faith as well and decreased their loan limits. The great depression in the US witnessed 50 leading top fall by half in two months. The period was seen with massive unemployment of US citizens with almost a quarter of the workforce unemployed during the period. Standards of living of citizens severely dropped[9]. Towards mid-1935 the standards of living began to improve thanks to the start of the great leap forward in the country. Labor movements and union mushroomed to champion against the untold suffering due to unemployment. The Security and Exchange Commission was formed in 1934 to make sure stock exchange was under check[10]. Macroeconomic policies to deal with economic downturns and upturns were put in place. By the early 1940s before World War 2, the US economy had already stabilized[11]. During World War 2, the United States was on a neutral position for years before the attack on pearl harbor. While the other countries were at war, the U.S. sold weapons and resources to the world, accumulated a huge amount of assets.
In conclusion, the events between the 1870s and 1945 before the world war in the US were crucial in shaping the US economy at that period and the present day. The period was witnessed with massive economic growth during the Industrial Revolution, and a significant economic dwindle as a result of the great depression. The dawn of the great depression triggers the formulation of financial sound policies that stabilized the economy after the great depression.
Bibliography
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[2] Eric Foner, Give Me Liberty! : An American History. New York, NY: W.W. Norton& Company, 2017. P702
[3] Eric Foner, Give Me Liberty! : An American History. New York, NY: W.W. Norton& Company, 2017. P669
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[6] Frieden, Jeffry. Banking on the world: the politics of American international finance. London Routledge, 2015.
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[8] Lee, MinHwa, JinHyo Yun, Andreas Pyka, DongKyu Won, Fumio Kodama, Giovanni Schiuma, HangSik Park et al. “How to respond to the Fourth Industrial Revolution, or the Second Information Technology Revolution? Dynamic new combinations between technology, market, and society through open innovation.” Journal of Open Innovation: Technology, Market, and Complexity 4, no. 3 (2018): 21.
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