Possible essay topics Strengths and weaknesses of the American economy The future of USD as a global currency Is the double deficit of the American economy sustainable? Future of American economy – prosperity or collapse? Lessons from the Great Depression ( ) The role of entrepreneurship in the economic success of the USA American health care reform – is Obamacare successful? The role of innovation in the American economy

Ing. Tomáš Dudáš, PhD.

Famous US industrialists in the 19 th century Cornelius Vanderbilt J. P. Morgan John D. Rockefeller Leland Stanford Henry Clay Frick John Jacob Astor Andrew Carnegie James Buchanan Duke

Famous US industrialists in the 19 th century Cornelius Vanderbilt - railroads J. P. Morgan – banking, finance, steel industry John D. Rockefeller – Standard Oil Leland Stanford - railroads Henry Clay Frick – steel industry John Jacob Astor – fur trade, real estate Andrew Carnegie – railroads, steel industry James Buchanan Duke - tobacco

Cornelius Vanderbilt John D. Rockefeller

J.P. Morgan Andrew Carnegie

The Economic Effects of the Civil War Approximately people died on both sides – 9 % of the male population in the age group Another were wounded Estimated loss of human capital – 1,8 billion USD on both sides Direct government expenditures – 2,3 billion in the North, 1 billion in the South Destruction of property – 1,5 billion USD (mainly in the South) On the other hand – the war was a great source of income for someone

Railroads and Economic Development The construction of railroads continued after the civil war By 1910 the USA had miles of track, of which were main track Constructing the American railroads was one of the biggest efforts in the American history Three major waves – 1868/73, 1879/83 and 1886/92 The majority of the construction was financed by borrowed money Government help – subsidies and land grants

Pacific Railroad ( )

Agriculture between 1860 and 1910 Huge expansion of farm output – extensive growth No chemical and biological improvements available Slow mechanization

Population growth and the Atlantic migration Strong migration – 37 million people came from Europe between 1840 and 1920 Sources - 6 million from Germany; 4.5 million from Ireland; 4.75 million from Italy; 4.2 million people from England, Scotland and Wales; 4.2 million from the Austro-Hungarian Empire; 2.3 million from Scandinavia; and 3.3 million people from Russia (mostly Jews, and Poles and Lithuanian Catholics) On the other hand, domestic fertility was decreasing (41,1 births/1000 people in 1860 compared to 29,2 births/1000 people in 1910)

Population growth and the Atlantic migration Other demographic trends Continuing rise in the population living in urban areas The country continued to spread out geographically The percentage of foreign born rose, especially from Europe The nonwhite portion of the population continued to fall

The rise of the heavy industry Industry growth rates between Machinery – 690 % Lumber – 650 % Printing and publishing – 520 % Iron and Steel – 310 % Men’s clothing – 260 % Railroad Cars – 205 %

The rise of the heavy industry American manufacturing production surpassed the combined total of Great Britain, Germany, and France Railroads opened new areas to commercial farming, creating a truly national marketplace and inspiring a boom in coal mining and steel production By 1900, the process of economic concentration had extended into most branches of industry—a few large corporations, called "trusts", dominated in steel, oil, sugar, meatpacking, and the manufacture of agriculture machinery Increased mechanization of industry is a major mark of the this era’s search for cheaper ways to create more product

Innovation The United States became a world leader in applied technology. From 1860 to 1890, 500,000 patents were issued for new inventions—over ten times the number issued in the previous seventy years George Westinghouse invented air brakes for trains (making them both safer and faster). Theodore Vail established the American Telephone & Telegraph Company. Thomas A. Edison invented a remarkable number of electrical devices, as well as the integrated power plant capable of lighting multiple buildings simultaneously Oil became an important resource, beginning with the Pennsylvania oil fields. Kerosene replaced whale oil and candles for lighting Frederick Taylor – innovation in management science

Examples of key inventions in the late 19 th century in the USA Alexander Graham Bell Telephone Thomas Alva Edison Light bulb Phonograph Levi Strauss Blue jeans Nikola Tesla Radio Christopher Latham Sholes Typewriter John Pemberton Coca-cola

Economic crises Panic of 1873 Start of the long (or great) depression (until 1879 – 65 months) It began with a crash on the Vienna Stock exchange Panic of 1893 It was caused by railroad overbuilding and shaky railroad financing which set off a series of bank failures – similar to the tech bubble In total over 15,000 companies and 500 banks failed

International economic relations of the USA International trade The share of USA was growing – 9,1 % in 1890 Shift from agricultural products to industrial Trade with Europe dominated From the start of the 20 th century the current account of the BoP recorded surpluses Heavy protectionism in the USA International capital flow During the turn of the centuries USA changed from international debtor to creditor

Big business and government intervention Rise of big business – huge wave of mergers during the last years of 19 th century 1892 – merger of Edison General Electric and Thomson- Houston Electric Company to form General Electric 1901 – merger of Carnegie Steel Company and several other steel and iron businesses to form the United States Steel Corporation Rise of Standard Oil – one of the first multinational enterprises

Why did corporations grow? Innovation produced economy of scale in the industry Declining transportation costs encouraged growth of optimal plant sizes Developing financial services in the capital markets made it easier for individual firms to achieve economies of scale Expansion of domestic and international markets made enlarged plat size profitable Mergers are used to control markets (instead of cartels) Other…

Government response Growing regulation of big business Railways – Interstate Commerce Commission Antitrust acts The Sherman Act (1890) It was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by the United States federal government Standard Oil – “unreasonable monopoly”

Most important Standard Oil successors Standard Oil of New Jersey (SONJ) - or Esso (S.O.) – renamed Exxon, now part of ExxonMobil. Standard Trust companies Carter Oil, Imperial Oil (Canada), and Standard of Louisiana were kept as part of Standard Oil of New Jersey after the breakup. Standard Oil of New York – or Socony, merged with Vacuum – renamed Mobil, now part of ExxonMobil. Standard Oil of California – or Socal – renamed Chevron, became ChevronTexaco, but returned to Chevron. Standard Oil of Indiana - or Stanolind, renamed Amoco (American Oil Co.) – now part of BP. Standard's Atlantic and the independent company Richfield merged to form Atlantic Richfield or ARCO, now part of BP. Atlantic operations were spun off and bought by Sunoco. Standard Oil of Kentucky – or Kyso was acquired by Standard Oil of California - currently Chevron. Continental Oil Company – or Conoco now part of ConocoPhillips. Standard Oil of Ohio – or Sohio now part of BP. The Ohio Oil Company – more commonly referred to as "The Ohio", and marketed gasoline under the Marathon name. The company is now known as Marathon Oil Company, and was often a rival with the in-state Standard spinoff, Sohio.

Henry Ford – man of a new era He was born in 1863 in Michigan in a farming family He never liked farm life, so he left to Detroit in 1879 to work as an apprentice machinist He worked for Westinghouse and later for Edison 1896 – experiments with Ford Quadricycle 1899 – Ford founded Detroit Automobile Company Henry Ford Company Ford & Malcomson, Ltd. later renamed as Ford Motor Company 1908 – Ford Model T (15 million sold) 1913 – Moving assembly belts