USM Open Source History Text: The World at War: World History 1914-1945

The Rise of the Industrial Economy

The phrase "the industrial revolution” is a misnomer. Industrialization, the process of replacing human labor with machines powered by non-animate energy sources (hydro-electric power, coal, petroleum), occurred over a very long period at different times and rates in different places. Even within states, and even in the most heavily industrialized of states like the United States, France, and Germany, large areas remained dependent on agriculture until well after 1914. In addition, the industrial revolution did not transform a pre-modern economy into a modern, industrial one overnight. Trends in early modern world history (1500 – 1800), like an increasing specialization of labor, the rise of plantation agriculture, economic links between home and colonial markets, a dramatic increase in the money supply due to new discoveries of gold and silver, increasing sophistication in the financial world, including the development of markets for insurance (particularly maritime insurance) and stocks, the rise of maritime military power to protect fleets, the shift of labor from the countryside to the town and city, and population increases created a fertile foundation for industrialization to occur. Together, historians label these trends “industrious revolutions” and the “commercial revolution.” In truth, like the “industrial revolution” these other "revolutions" were long, gradual processes.

In the eighteenth and early nineteenth centuries, early industrialization centered on textile production, which, combined with naval power, made Britain the richest and most powerful state in the world. Britain's imperial holdings and influence, as discussed in the previous chapter, stretched around the world and created lucrative markets and agricultural bastions to support the island nation. During the second half of the nineteenth century, northern European states and the United States saw massive industrial growth. By the last years of the nineteenth century, the United States had overtaken Britain as the largest industrial economy in the world. By the 1880s, Britain was no longer the only major industrial economy in Europe. The newly unified Germany (1871) had become a fierce rival to the British. Britain was still the dominant colonial power, but this status, too, was being threatened on all sides, by France in the Middle East and South Asia, by the French and the Germans in Africa, by the United States and others in the Far East, and by the Russians in Central and Southeastern Asia, including Iran and India.

Industrialization ushered in, and was spurred on by, a transportation revolution. Railroads, once the exclusive domain of industrializing Europe, began to cut paths through Europe, North and South America, India, Africa, Russia, and beyond. Once a perilous journey of life and death over many months, people could now travel with relative ease across wide expanses of terrain: from the east to the west coast of the United States, from the southern part of India to the north, and across the vast expanse of Russian Siberia. Coal-powered steamers came gradually to replace sailing vessels. Important canals were financed and built by European powers and the United States in conjunction with colonial partners, which allowed ships to more quickly reach colonial destinations. The opening of the Suez Canal in Egypt in 1869 marked a critical step in the development of the British Empire. The canal meant that the length of the journey between England and India was reduced by half. It also meant that control of the canal was of utmost importance to the British Empire. The political climate in Egypt became fundamentally important to British imperial interests. Britain seized control of Egypt in 1882, when political unrest in the country compromised the government's ability to repay its massive debts to British and European banks. A similar colonial relationship emerged between the United States and Panama after the opening of the Panama Canal in 1914. Panama, which had been a province of the nation of Colombia, was separated from Colombia and made into a subservient nation of the United States in order to guarantee U.S. interests in the canal. This was an important move from the perspective of U.S. commercial and naval power. The ability to move from the Atlantic to the Pacific and to patrol both coasts was key to the development and power of the United States. The Pacific was becoming much more important to the United States after the expansion west reached its limits. Linking the productive capacity of the east with the imperial agenda in Asia brought the United States into the center of the imperial world.

From 1848 until 1914, the industrial economies of Europe expanded dramatically. Coal and iron mining reached new heights with every passing year. It is hard to overestimate the importance of coal to the industrializing world. In the years before 1900, coal provided an astounding 95% of Europe’s energy. What was done with all that coal? First and foremost, coal made possible a railroad boom. Railroads began crisscrossing the world’s developing territories, linking raw materials with industrial producers, linking factories with distributors, distributors with consumers. Overland transportation costs were slashed. Diverse goods, whether iron, grain, beef, or cotton, could now be mass-produced in one location and distributed nationally or even internationally. The ability of the railroad to efficiently deliver beef from Chicago to Boston, for example, pushed out local farmers and led to strong protests. The result was the passing of a federal protection of the local meat industry in the form of the Pure Food and Drug Acts in 1903, a shortsighted law that did little to slowdown the increasingly internationalized food industry. 

Coal also made possible the large-scale mining of iron ore and the process of turning iron into steel, which with the invention of the open hearth furnace in 1864 became a relatively cheap commodity. Coal made possible steam-driven naval and commercial shipping power. Coal and hydroelectric power ran textile plants. Coal was to this age what petroleum was to the next, the combustible catalyst of economic growth. Without coal, industrialization is impossible to imagine. Countries with large coal deposits were poised to exploit this resource for economic gain. These included Britain, Germany, the United States, Austria, and France.

Rapid and severe environmental degradation placed no check on industrial expansion. The loss of life caused by this environmental disaster, if it could be counted, most likely would run into the tens of millions. We are still living amidst this industrializing environmental trauma. For the purposes of our period from 1914 to 1945, I would argue that the increasingly bleak environmental picture played a large part in nations’ imperial aspirations. The first tremors of industrialism’s unsustainable effects on the environment encouraged the expansion of national boundaries. Proof of increased environmental awareness comes in many forms, the increasing popularity of Romantic landscape painting in Europe and the United States, conservationism and the creation of protected national parks in the United States in 1890, the founding of the Sierra Club in 1892, national parks in Argentina in 1903, the Wandervogel youth movement in Germany in the late 1890s, the surge of Kleingarten (small or kitchen garden) communities in Germany and Austria, or the coining of the word “smog” in England to describe urban airborne pollution in 1905.
Coal powered industrialization brought innumerable social changes. Here, I will list only the most critical for understanding the state of the world around 1914.

1. Urbanization: industrialization caused a major shift in population from the countryside to the city. Cities throughout the industrial world exploded in this period. Berlin grew from 419,000 in 1850 to 1,889,000 in 1900. London went from 2,682,000 to 6,586,000. New York ballooned from 515,500 to 3,437,000. Worldwide, the percentage of people living in urban areas grew from 12% to 20% between 1870 and 1900. If we consider that in 2008-2009, the world became for the first time in history majority urban and that by 2050 it is estimated that 70% of the world’s population will live in urban areas, we start to see how striking this trend is. The social consequences of these shifting demographics are massive and largely unforeseeable. Collectively, this trend is called urbanization. Urbanization and the “new city” was a topic much discussed around 1914. Some celebrated the new city and the technological, artistic, and economic power it represented or embodied. Others decried it as an impersonal, unfeeling Moloch set on chewing up or crushing the human spirit or soul. Other felt that the modern city had become the home of the decadent, the criminal, the foreign, and sought to counter its influence by promoting the "traditional" rural values. Other still sought to escape these metropolises through emigration: to the North American West, African or Asian colonies, Australia, New Zealand, South America, in short, wherever open land could be had or taken through force.

2. New Worker: industrialization, as one would expect, changed the way people worked. Increasingly, people moved from agriculture and artisanal work to skilled or unskilled factory work or white-collar professions. This meant, at least in the case of countries like Britain or Germany, a sharp decrease in the amount of domestic food production. Because these new workers, whether they worked in factories or in offices, earned wages, they were forced to participate in the market as consumers. Accordingly, they were impacted immediately by rising and falling prices. And this meant that more and more people became linked directly to the fluctuations of an international market economy, feeling acutely its surges and its painful contractions. In periods of acute or prolonged contraction, the new industrial working class would see its living standards (measured in calories per day) fall below pre-industrial levels. Workers in the new economy gradually began to organize and advocate for their own interests. Professional associations formed, like the American Bar Association (lawyers) in 1878. Unions and other working class movements also grew, especially in Britain, Germany, and the United States. The growth of associations and unions impacted politics. As universal male suffrage became the rule in most industrializing countries, political parties jockeyed for the support of both industrial and white-collar workers in addition to older constituencies (shopkeepers, artisans, peasants, elite). The newly created American Medical Association (1847), in order to establish control over medical practice in the United States, issued the following code: 

3. New Ideas: The period of rapid industrial expansion brought with it a dramatic expansion of support for applied sciences. Biology, medicine, chemistry, engineering, physics, and mathematics all witnessed enormous development. New academic disciplines like sociology took root. Darwin’s theories spread around the world, as did those by Freud, Nietzsche, and Karl Marx.

4. Linked World: Between 1848 and 1914, the world became more intertwined than ever before. This is largely because of European imperialism, but it also goes deeper than this. Economic links tied markets together. Increasingly, industrial manufacturing required raw materials from around the world. Cotton came to Britain from the United States, Egypt, and India. Beef arrived in London from Argentina. Wool came from Australia. Palm oil, the primary industrial lubricant, flowed in from the Niger delta. In addition, British, European, and U.S. capital flowed out into the world to finance infrastructural projects like railroads, roads, canals, dams, and irrigation schemes. Capital accumulation in Britain was so massive that without foreign investment, there would have been nothing enticing to do with the money.

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